The Existence of an Actual Employment Relationship is Sufficient to Confer Jurisdiction on the Labour Court, Whereas Civil Law Applies in the Absence of a Work Permit

Practice Area: Labour Law / Employment Law (UAE) – Jurisdictional Competence of Labour Courts; Employment Relationship Determination; Work Permit Compliance; Applicable Law (Labour vs Civil Law)

Outcome: The Court of Cassation set aside the Court of Appeal’s judgment and affirmed the jurisdiction of the Labour Court based on the existence of an actual employment relationship.
The dispute was remitted to be adjudicated on its merits under civil law provisions despite the absence of a work permit.

In a notable judicial development, the Court of Cassation examined a complex labour dispute between an employee and a company, ultimately establishing an important legal principle concerning the jurisdiction of labour courts and the legal implications of the absence of a work permit.

The facts of the case concern an employee who filed a labour claim against his employer seeking outstanding financial entitlements, asserting that he had been performing his duties in an actual and continuous manner, and that his employment was terminated without lawful justification, while the company failed to pay his dues.

The Court of First Instance ruled in favour of the employee and ordered the company to pay the claimed amounts. However, the company did not accept the judgment and appealed before the Court of Appeal, which overturned the decision and held that the labour court lacked jurisdiction. The appellate court based its ruling on the employee’s failure to obtain a work permit issued by the Ministry of Human Resources and Emiratisation, as well as the absence of a formal employment contract, thereby negating in its view  his status as an employee under the Labour Relations Law.

This ruling did not go unchallenged, as the employee appealed to the Court of Cassation, arguing that the employment relationship was in fact established through multiple pieces of evidence, including termination letters issued by the company, signed salary slips, payment vouchers, his inclusion in the organisational structure, and daily work correspondence. According to the appellant, these constituted decisive indicia of an employment relationship based on subordination, remuneration, and continuity, regardless of formal procedural requirements relating to work permits.

The Court of Cassation brought an end to the dispute, affirming that the determining factor for the jurisdiction of the labour court is the existence of an actual employment relationship alleged by one of the parties, rather than mere compliance with administrative formalities. The Court relied on Article 3 of Decision No. 18 of 2025 issued by the President of the Judicial Department, which grants the labour court comprehensive jurisdiction over all disputes filed by or against workers, without conditioning such jurisdiction on the registration of the establishment or the completion of permits.

The Court further emphasised that the documents submitted in the case clearly demonstrated the existence of a genuine employment relationship between the parties, which the company did not categorically deny, thereby confirming the labour court’s jurisdiction.

On the other hand, the Court clarified that the absence of a work permit does not negate the existence of an actual employment relationship; however, it prevents the application of the protections stipulated under labour law, rendering the relationship subject to the provisions of civil law in accordance with Article 6 of Federal Decree-Law No. 33 of 2021 concerning the Regulation of Labour Relations.

The Court of Cassation therefore overturned the Court of Appeal’s judgment and ruled anew that the labour court has jurisdiction to hear the case, while the merits of the dispute are governed by civil law provisions.

Legal Principle Established by the Court:

The existence of an actual employment relationship is sufficient to establish the jurisdiction of the labour court; however, the absence of a work permit precludes the application of labour law provisions, and the dispute is instead governed by the general rules of civil law.

This judgment reflects a clear judicial approach affirming that courts prioritise the substantive reality of the employment relationship over formal considerations, thereby ensuring that workers’ rights are not lost due to procedural defects, while at the same time preserving regulatory safeguards within the labour market achieving a balance between justice and the governance of employment relations.