Everything You Need to Know about Limitation Period of Labour Cases in the UAE

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To start with, the UAE labour law defines the employment
contract as “any agreement for a definite or indefinite term, concluded
between an employer and an employee, whereby the latter undertakes to work in
the employer’s service and under his/her management and control, in return of a
certain wage that the employer undertakes to pay.” A worker is defined as “any
male or female working, for a wage of any kind, in the service or under the
management or control of an employer, albeit out of his/her sight. This term
applies also to labourers and employees who are in an employer’s service and
are governed by the provisions of this Law.” Also, employer is defined as “any
natural or legal person employing one or more workers in return of any kind of
wage.” It is worth noting that the UAE labour law did not require that the employment
contract is in writing. The employment contract and its terms and conditions can
be verified by all legal methods of evidence. However, in the event that the employment
contract is not in writing, such contract is for an indefinite term, noting that the
mutual rights and obligations under the indefinite term contract are different
from those under the fixed-term contract.

The employer is legally required to pay the worker’s wage as agreed upon
once the worker performs, prepares himself and devotes his/her time to the job
even if no work is assigned to him. The basic wage is what the worker receives
under the contract or the agreement concluded between the worker and the employer,
in cash or in-kind, whether on yearly, monthly, weekly, daily, hourly, piecemeal,
output or commission basis as agreed. In addition, the wage shall include the
cost of living allowance or any grant given to a worker as a reward for his/her
honesty or efficiency, provided such amounts are stipulated in the employment contract
or in the firm’s internal regulations or are being so customarily granted that
the firm workers regard them as part of their wage and not as donations.

The basic wage shall be stipulated in the employment contract or to be agreed
upon, as the case may be. There is a need to distinguish between the general
concept of remuneration and the basic wage as the allowances are not to be
taken into account in calculating the basic wage, as opposed to the numeration.
This distinction has a significant importance when the worker’s rights and
benefits are calculated by the employer. Some benefits are calculated as per
the basic wage and others are calculated as per the remuneration inclusive
of some or all allowances.

  • Termination of employment relationship:

The the employment relationship, like other mutually binding contracts and other legal
agreements, could end in different situations and scenarios. It may be
unilaterally terminated by the employee or employer, with or without a legal
cause. It could also be terminated by their mutual agreement. The employment
relationship could end in accordance with the nature of the contract, in case
of the fixed-term contract or upon the completion of agreed specific work.
Also, the employment relationship may be terminated by the court. The
employment contract ends upon the death or total disability of the employee by
a virtue of approved medical certificate. The employment contract may end with
the death of the employer if his/her personality has been taken into account
upon the conclusion of the employment contract. Having said that, the end of
the employment relationship for any reason whatsoever may result in a dispute
between the parties on whether or not any party is entitled to receive any kind
of benefits and if so, the amount of the same.

  • What are the labour entitlements?

Labour entitlements are the rights guaranteed by law or employment contract. In case the
employment contract grants the employee more advantageous rights and benefits than
those stipulated in the law, such advantageous rights shall take precedence
over those set out in the law. As such, the employee has the right to require
the employer to pay all his/her guaranteed rights. Such rights include, but not
limited to, the right to receive the unpaid wages, overtime pay, end of service
benefits, cash in lieu of the notice – in case the employer terminates the
employment contract without giving the employee a prior notice, and cash in
lieu of the unused balance of the annual leave. In addition, the employee is
entitled to make a claim for the enumeration of his/her work done during public
and official holidays. The employee is also entitled to receive compensation
in case it is proved that his/her termination was unfair without a legal cause.
The employee is entitled to receive a repatriation ticket – in cash or in-kind –
in case he is recruited from outside the state, he does not join another
employer and the employer does not prove that the worker is able to bear its
expenses. These rights differ according to the type of contract or agreement
and its duration and the reason for the termination and the person responsible
for it. The amount of the financial value of such rights varies according to
the value of the basic wage and numeration, all of which are related to the
existence of the legal justification.

  • Time bar as a general principle:

Prescription means the lapse of the time limit. In jurisprudence, the prescription
can either result in the acquisition or the forfeiture of a right. In the case of
the forfeiture of a right, the statute of limitations imposes a negative
the situation, i,e. preventing the creditor from exercising his/her right or making
a claim of right. The acquisitive prescription requires a positive status,
being the possession. As a matter of fact, the statute of limitations is not founded
on a purely legal basis, since the lapse of a period of time per se
doesn’t lead to any legal effect, as it does not result in the acquisition or
loss of any right, unless other elements are added (such as the negligence in
making the claim). For various considerations, the jurisprudence adopted the idea that the lapse of a relatively long period of time should lead to the extinguishment
of the creditor’s right or the case which protects such right if he remains
silent throughout such period and fails to make a claim. The time must erase
all things. Such considerations that called on legislators to adopt this system
include the reliance on the presumption that debtor’s liability for the debt is
released, since the statute of limitations is based on the presumption that
debtor’s liability for the debt is discharged, either because he actually fulfilled
it – the presumption of satisfaction- or because the creditor has absolved the
the debtor of the debt – the presumption of release, because why the creditor remained
silent throughout this period and failed to make a claim to recover his/her
debt. The other considerations for the statute of limitations include the
desire of the legislator not to overburden the debtor with the accumulation of
debts so that the accumulated debt for many years, shall be extinguished for
the sake of preventing arbitrariness.

Also, it has been said that the statute of limitations is based on the idea that the
negligent creditor, who waited until such a long period of time lapsed without
making a claim of right should be punished. In this regard, the law prefers
the interest of the debtor who did nothing to be blamed for to the interests of
the negligent creditor. This type of statute of limitations focuses on several
considerations intended to protect the public interest, since the stable
dealings are largely based on the concept of limitations. For instance, if the
the creditor can make a claim against his/her debtor regardless of how long time
has elapsed since he was entitled to receive the claimed amount and the debtor
is required to prove that he has already fulfilled his/her liability and
received the relevant discharge and clearance letter; then, it will be very
burdensome to require the debtor to keep such discharge and clearance letter
safely forever to prove that he has fulfilled the claimed debt.

For the sake of stable dealings, the creditor who kept silent for a long period of
time is supposed to have received his/her entitlements or to have discharged the
debtor of the debt. The creditor’s right may not stand existing for an
indefinite period. Therefore, legal jurisprudence came to establish an
an appropriate and reasonable period of time that varies according to the type of
right and the relevant legislation, so that such a period is not so long to
overburden the debtor, nor it is short to prejudice the creditor’s rights. It
is worth noting that the UAE legislator has stated in Article ( 473) of the
Civil Transactions Law that (A right shall not expire by the passage of time
but no claim shall be heard if denied after the lapse of fifteen years without
lawful excuse, but having regard to any special provisions relating thereto).
It follows that the UAE legislator, as a general principle, defines the
duration by which the claim of right is time-barred as fifteen years without a
legitimate excuse, taking into account the events which are subject to special
provisions. The UAE labour law contains special provisions indicating the time
by which the labour claims are time barred as stated in detail in the below Article:

  • The statute of limitations in respect of labour claims and disputes in the UAE labour law:

Building on the above, the statute of limitations can be defined as the passage of a
given period of time without creditor making a claim against the debtor to
recover his/her debt the resulting consequence of the extinguishment of the
debtor’s liability for the claimed debt and the forfeiture of the creditor’s
right to make a claim in respect of such debt. The UAE legislator has adopted
the principle of a statute of limitations in respect of the claims arising from labour
rights, while some comparative legislations have adopted the idea that the
cases for labour entitlements are not time-barred at all.

The UAE legislator has set forth special provisions indicating the statute of
limitations in respect of claims related to labour rights. The claims related
to labour entitlements are not heard after one year in case of denial by the
opponent party. Article (6) of the Labour law stipulates that no claim for any
rights due according to the provisions of this Law will be heard after lapse of
one year from date of its maturity.

This shows that the prescription period shall commence from the actual due date of such
rights. Such period shall be calculated in days and the first day may not be counted.
The period will be completed by the last day thereof unless the last day falls
on an official holiday. In such an event, it extends to the next day. The days are
calculated by reference to the Gregorian calendar. The year is 365 days and the
month is 30 days, unless the contract of employment stipulates otherwise.

  • Suspension and interruption of the
    statute of limitations period in respect of labour claims:

According to the UAE Civil Transactions Law, the statute of limitations to hear a claim
of right is fifteen years. However, as an exception to the general principle mentioned
above, the UAE Labour Law sets forth a special provision stipulating that the
labour claims are time-barred after the lapse of one year from date of its
maturity. However, this period stipulated in the UAE labour law may not apply
absolutely to all events. The running of time for prescription shall be
suspended if there is a lawful excuse whereby the claim for the right could not
be made. The period during which that excuse subsisted shall not be taken into
account in the prescription period. An admission by an obligor of a right,
whether express or by implication, shall interrupt the time laid down for
prescription. Also, the prescription period shall be interrupted upon a
judicial claim being made or by any judicial proceeding being taken by an
obligee to enforce his/her right. As a general rule, if the period of
prescription is interrupted, a new period equivalent to the first period shall

The jurisprudence and legislation in the UAE have indicated some mitigating circumstances
which may suspend or interpret the prescription period in respect of the labour
claims. While it has not been explicitly set out in the Labour Law, it has been
consistently held by the UAE courts that the lawful excuse suspends the
the prescription period in relation to labour claims by reference to the general rules
of law stated in the Civil Transactions Law. Noteworthy, in case a labour claim
is made after the expiry of the time limit by the legal heirs of a deceased employee
and some legal heirs have a lawful excuse and the others don’t have a lawful excuse,
the claim brought by those who are having lawful excuse shall be heard to the extent of
their share. In any event, the determination of whether or not an
excuse constitutes a lawful excuse suspending the prescription period or
whether or not the admission by an obligor of a right which interrupts the
prescription period is valid shall be subject to the discretionary powers of
the court.

To sum up, cases related to labour entitlements, may not be heard after the lapse
of one year from the due date thereof, in accordance with the special
provisions set out in the UAE labour law. This is an exception from the general
rules and provisions stated in the Civil Transactions Law, which provides a
prescription period of fifteen years from the due date. However, the
UAE legislator have established some mitigating circumstances and exceptions
intended to protect the public interest by stabilizing the situations arising
out of the employment relationship and the non-forfeiture of the right, as
stipulated in the general rules which interrupt or suspend the prescription
period in respect of cases arising out of labour disputes. Needless to say, the
UAE legislator did not consider the argument related to the forfeiture of right in relation to
hearing labour rights as a matter of public order as the court may not deal with
such argument on its own, unless it has been raised before the trial court.

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