Dubai court orders firm to repay Dh1.38m for workers' dues

Dubai: A Dubai court has ordered a company to repay Dh1.38 million to an insurance provider after the insurer paid the outstanding labour entitlements of 86 workers on the company's behalf under the UAE's workers' insurance scheme.

The court also ordered the company to pay legal interest at 5 per cent annually from the date the lawsuit was filed until full payment, in addition to court costs and Dh2,000 in lawyer's fees.

According to court records, the insurance company filed a lawsuit seeking reimbursement of Dh1,380,299, representing labour-related payments it had made after the employer failed to meet its obligations toward its workers.

The case arose under the workers' insurance system introduced by the UAE Cabinet in 2018 as an alternative to the bank guarantee system previously required for employers. The scheme, overseen by the Ministry of Human Resources and Emiratisation, is designed to protect workers' rights by ensuring payment of key employment benefits when an employer defaults.

Under the insurance policy, coverage extends to end-of-service gratuity, unpaid wages, leave allowances, repatriation expenses, transportation of a deceased worker's remains, and costs related to occupational injuries and diseases, up to a maximum of Dh20,000 per worker.

Court documents showed that a Labour Disputes Settlement Committee had previously ordered the company to pay more than Dh4.09 million in outstanding labour entitlements to 86 workers.

Following the decision, Dubai Courts' Enforcement Department directed the insurance company to liquidate the workers' insurance coverage. After applying the terms of the policy, the insurer determined that Dh1.38 million was payable within the limits of the available coverage.

The insurance company subsequently transferred the amount to Dubai Courts in October 2025 for distribution to the affected workers.

However, despite repeated demands, the employer failed to reimburse the insurer for the amount paid on its behalf, prompting the legal action.

The court noted that the insurance certificates issued for the workers expressly incorporated the terms of the insurance policy, which grants the insurer the right to recover any compensation paid to workers from the employer responsible for the debt.

In its reasoning, the court emphasised that contractual obligations are binding on all parties and must be honoured according to their terms. It also cited established legal principles confirming that where contract provisions are clear and unambiguous, they must be enforced as written.

The court found that the insurer had fulfilled its obligations after receiving an enforcement order to settle the workers' claims and therefore acquired a legal right to recover the amount from the employer.

The judgment further stated that the employer's liability to reimburse the insurer arose once the insurance coverage was liquidated and the workers' dues were paid, regardless of whether the underlying labour ruling had become final.

As the company failed to appear before the court or contest the claim despite being legally notified, the court issued its judgment in absentia.

The court ultimately ordered the company to pay Dh1,380,299 to the insurance provider, together with legal interest at 5 per cent per year from the date of judicial claim until full settlement, as well as court fees, expenses and lawyer's fees.