Executive Summary
Dubai Courts issued Circular No. (2) of 2025, introducing a 2% enforcement fee on labor judgment enforcement files. This decision, effective August 25, 2025, aims to enhance judicial efficiency, ensure transparency, and support the sustainability of labor dispute resolution in the UAE.
Introduction
Labor disputes are among the most common cases brought before UAE courts. Traditionally, enforcement of labor judgments involved minimal fees, but with the growing number of disputes and rising operational costs, Dubai Courts introduced this new fee structure. The decision ensures better resource allocation, discourages frivolous claims, and strengthens the integrity of the enforcement system.
Text of the Circular
Pursuant to Circular No. (2) of 2025 concerning the enforcement fee on labor judgment execution files, it has been decided as follows:
Article (1):
- A 2% enforcement fee is added to all labor judgment enforcement files.
- For fee calculation purposes, fractions of a dirham are rounded up to the nearest full dirham.
- If the fee exceeds AED 50, an additional innovation and knowledge fee will apply as prescribed by law.
Article (2):
- These additions apply to all labor judgment enforcement files starting August 25, 2025.
Legal Analysis
- Strengthening Judicial Efficiency
The new fee helps reduce non-serious or repetitive claims and encourages parties to resolve disputes amicably before enforcement.
- Sustainable Court Operations
By introducing this fee, Dubai Courts ensure coverage of administrative and technical costs, supporting sustainable operations.
- Impact on Employers and Employees
- Employers: Will face additional costs when losing labor cases.
- Employees: While costs may slightly increase, the measure enhances speed, efficiency, and reliability of judgment enforcement.
Implications for Law Firms
- Case Management – Firms must update cost estimates for clients to reflect the new enforcement fee.
- Legal Advisory – Lawyers should explain the financial implications of this circular to both employers and employees.
- Preventive Strategies – Encourage corporate clients to improve HR compliance and reduce litigation risks.
- Alternative Dispute Resolution – Promote mediation and settlement options as cost-effective alternatives.
Opportunities and Challenges
Opportunities | Challenges |
|---|---|
Faster enforcement of labor judgments | Increased financial burden on employers |
More transparent judicial processes | Need to adjust billing and case budgeting |
Higher quality of cases reaching courts | Possible decline in small claims |
Supports Dubai’s digital and judicial transformation | Requirement for law firms to train staff on new rules |
Practical Tips for Companies and Lawyers
- For Employers:
- Review employment contracts to ensure clarity on obligations.
- Allocate annual budgets that account for potential enforcement costs.
- For Law Firms:
- Issue client updates and newsletters explaining the circular.
- Use LegalTech tools to track enforcement fees and manage cases.
- Encourage mediation and negotiation before entering enforcement stage.
Frequently Asked Questions (FAQ)
When does the new fee apply?
How much is the new fee?
Does it apply to all labor cases?
Are there any additional fees?
How will this affect companies?
Dr. Abdulwahab Abdool
Managing Partner
Subscribe Newsletter
Sign up to receive notifications about the latest news and events from us!
