UAE - As part of a new legal provision, Dubai Courts can issue an order to freeze companies' assets that fail to pay the salaries of more than 100 workers.

The direction, followed by the Labour Court, is part of the efforts to tighten legal measures against employers involved in unpaid wages of a large group of labourers and safeguard employee rights.

Ghassan El Daye, Partner and Head of Litigation Middle East at Charles Russell Speechlys, said freezing a company's assets through the execution court guarantees employee rights even before a final verdict.

"Previously, this kind of measure was taken after a final judgment was issued. Under the UAE Civil Procedures Law, the Court of Appeal would issue a final verdict, which meant workers had to pass through first and second-degree courts before reaching a final settlement – a process that may take up to one year, giving employers with bad faith enough time to shift all their assets."

He added, “Now with the court’s immediate freeze order, the execution court takes action so workers would have their rights secured before the final verdict.”

The new provision gives the court the authority to freeze a company’s assets until a resolution with the employer is reached whether on amicable terms or through a court verdict.

El Daye noted that if no resolution is reached with the employer, the company’s assets are dissolved to pay off the workers’ wages.

He stressed that the legal provision complements Article 22/2 of the new Labour Law that obliges employers to pay wages on time, thus, creating a binding effect.

“It protects employee rights and dignity and establishes respect as a main pillar in any employment relation,” he added.

How to take a group labourer complaint forward?

If a large group of employees working in one company are not paid on time, they can file a complaint online with the competent authority where their work contract was issued - whether the free zone or Office of Labour at the Ministry of Human Resources and Emiratization (MoHRE).

The authority reviews the complaint and works to reach an amicable settlement between the employer and employees before shifting the case to the Labour Court.

What are the steps that workers should follow?

1. The group of employees can register one complaint online.

2. Select the “unpaid salaries” category and include all the names of complainants.

3. Save the complaint number.

4. The authority notifies the employer of the complaint.

5. The competent authority (Office of Labour or free zone) appoints a hearing for both parties to attend before the ministry to reach a reconciliation.

6. If a reconciliation is not reached, then the case will be referred to Labour Court.

How to prove that salaries are not paid?

The ministry’s Wage Protection System detects the value and time of the last salary released.

All companies registered with MoHRE are required to release salaries through the WPS.

The system helps preserve all employee rights, especially those who do not speak Arabic nor have access to legal services.

How much time does it normally take to reach a resolution?

The issue can be resolved within two weeks up to a month if reconciliation has been reached by the competent authority.

If it goes to court, the case may take up to one year to resolve. For group labourer disputes, the court freezes the assets of the company until a verdict is issued.

How is it different for individual labourer cases?

Steps of registering a complaint, documents needed and the process are the same.

Under Article 54 of the new Labour Law, the employee can issue a complaint to the ministry. If no reconciliation has been reached, the case will be referred to court.

The relevant court is to determine a hearing within three days of receiving the application. Final resolution can be reached within six months up to a year.

It is also worth noting that the new Labour Law exempts employees from judicial fees at all stages of litigation and enforcement for petitions with a value not exceeding Dh100,000.

What is the course of action that happens henceforth? Will an employer be asked to pay additional compensation on top of the unpaid salary?

Court grants basic labour rights, which includes the salary, transport, housing, leave compensation and end of service gratuity for each year of service, in addition to a five per cent legal interest annually.

How can companies avoid landing in court?

Companies must have budgets before recruiting employees. By default, it is the employer duty to ensure enough budget is allocated.

If a company faces financial distress due to economic crisis or other emergencies, it has to amend the employment contract of employees if there is a salary decrease. Practical solutions must be communicated with employees to preserve rights.


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