The UAE has fined several employers millions for falsely maintaining employment activity and inactive businesses, stressing compliance with stringent labor laws.

Since January, roughly 1,300 establishments owned by about 1,800 employers in the UAE have been identified by the Ministry of Human Resources and Emiratisation (MoHRE) for violating employment and licensing regulations.

These businesses were discovered to have either ceased operations or failed to engage properly in their licensed activities, yet continued sponsoring workers without an actual working relationship with the employer.

UAE Business Penalties

In response, MoHRE has implemented a range of stringent penalties:

  • Fines totaling AED34 million ($9.25 million) have been issued
  • Offending establishments have been downgraded to the third category in the ministry’s classification system
  • Work permit issuance has been suspended
  • Employers are prohibited from registering any new companies within MoHRE systems

The ministry’s actions are in accordance with Federal Decree-Law No. 33 of 2021 on Regulating Labour Relations, as well as Cabinet Resolution No. 21 of 2020 and Ministerial Resolution No. 318 of 2024.

MoHRE has urged all employers to cancel licences and settle their workers’ statuses if business operations have ceased. They warned that licensed establishments that are inactive yet have registered employees are in clear violation of UAE labour laws.

Legal consequences apply to both the employers and the workers involved.

The ministry commended the effectiveness of its integrated monitoring system, which uses a combination of digital tools and field inspections. These mechanisms evaluate establishment activity based on authorised business operations, workforce size, ministry transaction records, and other verified indicators.