An employer's claim to recover a personal loan to an employee is not subject to the labour-law one-year bar

Dubai Court of Cassation, Labour Appeal No. 20 of 2025, judgment of 29 April 2025

Court
Dubai Court of Cassationمحكمة التمييز - دبي
Case
Dubai Court of Cassation, Labour Appeal No. 20 of 2025, judgment of 29 April 2025
Arabic citation
الطعن رقم 20 لسنة 2025 طعن عمالي، جلسة 29/4/2025
Topics
Employment
The judgment
Read it on dc.gov.ae ↗ (Dubai Courts, judgment publication service (نشر الأحكام), Court of Cassation, Labour Appeal No. 20 of 2025)
Summary written
1 November 2026
Print

The principle

Laws do not apply retroactively; a legal relationship and its effects are governed by the law in force when they arose. Under Article 6 of the former Labour Relations Law (Federal Law No. 8 of 1980), which governed a cash advance made and fully due before the 2021 law, the one-year bar applies only to claims, by worker or employer, concerning a right arising under that Law. An employer's claim to recover a personal loan made to an employee, where it did not seek deduction from the wage or gratuity under the provisions of that Law allowing such deductions, does not concern such a right and is not subject to the one-year bar.

The case and the decision

A contracting company employed a worker from November 2018 until it dismissed him in June 2024. In July 2020 it lent him AED 15,000, repayable in seven instalments, the last falling due in February 2021. In August 2024 it applied to the Ministry of Human Resources and Emiratisation to recover the unpaid loan. The Ministry decided that the claim was time-barred. The company then brought an action against the Ministry's decision; the employee pleaded limitation and said that the owner had told him the money was a bonus. The Court of First Instance dismissed the action: because Article 60 of the former Labour Relations Law regulated deductions from wages to recover advances, a claim to recover an advance was a claim to a right under that Law and subject to its one-year bar.

The Attorney General challenged the judgment in cassation, arguing that the one-year bar did not apply to a claim based on a loan agreement.

The Court of Cassation agreed. Laws do not reach back to the past; the courts must apply to a legal relationship and its effects the law under which they arose. Under Article 6(3) of the Labour Relations Law of 1980, the law in force when the advance was made and all its instalments fell due, a claim is barred after one year only if it concerns a right arising under that Law. The company was claiming repayment of a personal loan, and nothing showed that it had asked for the amount to be deducted from the worker's wage or end-of-service gratuity under Articles 60 and 135 of that Law. Its claim therefore had no connection with rights arising under the Labour Law, and the one-year bar did not apply. The judgment was quashed and the case was remitted to the Court of First Instance.

Why it matters

Employers often advance money to staff. The judgment shows that a claim to recover such a loan is not caught by the short labour-law limitation period unless the employer proceeds by way of deduction under the Labour Law. It was decided under the 1980 Labour Law because the loan and all its instalments predated the 2021 Labour Relations Law.

Laws applied

Articles 6, 60 and 135 of Federal Law No. 8 of 1980 Regulating Labour Relations
Decided under this law; it has been replaced by UAE Labour Law.

In the court’s words

“فإن دعوى مطالبتها تلك طالما أنها لم تستند على إي نص من النصين المذكورين فإنها لا تكون لها أية علاقة بأية حقوق مصدرها قانون تنظيم علاقات العمل”

Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.

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Source. Summary written by Polaris from the judgment published by the Dubai Court of Cassation on dc.gov.ae (Dubai Courts, judgment publication service (نشر الأحكام), Court of Cassation, Labour Appeal No. 20 of 2025), read on 1 November 2026. Party names are anonymised in the court’s publication.
Published for general information by Polaris Corporate Services FZ-LLC. It is not legal advice. This page is a summary written by Polaris; it is not the judgment and is not an official translation. Read the judgment on the court’s official service before relying on it. A judgment decides the dispute before the court; its weight in a later case depends on the court, the facts and any later change in the law or in the court’s own case law.

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