UAE labour law amendment in contract period, expiry & renewal

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UAE labour law amendment
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The UAE government has recently issued Federal Decree Law No. (14) in 2022 which modified UAE labour law amendment, which came into effect in February 2022.

A new directive was released from the UAE government, lifting a 3-year limit on the length of contracts with fixed terms for the private sector as an update to the new laws on labour that came into effect in February.

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The new UAE labour law amendments mean that contracts for employment must be covered by an agreed-upon period of time, but the law will not define a limit on how long the contract may be.

The Ministry of Human Resources and Emiratisation declared that contracts could be renewed in the event that both parties are in agreement with the terms.

This amendment seeks to protect both parties, improve the growth of the labour market and boost the competitiveness of the UAE’s economy according to officials.

A series of changes to the labour law first made public in November stated that contracts for work could not be longer than three years.

The indefinite contracts could be converted into fixed-term contracts that could be renewed as per the Federal Decree Law No 33 of 2021 that was issued by deceased Sheikh Khalifa.

In the new legislation that was enacted by Federal Decree-Law No 14 of 2022 -Employment contracts must be covered by an agreed-upon period, which is which is agreed by an employee and employer, however “The law does not prescribe any time limit for this period”.

“The UAE government continues to make laws and regulations which are in line with the coming 50 years of the UAE’s growth require,” said Abdulrahman Al Awar the Minister for Human Resources and Emiratisation.

“Regulations are designed to enhance the stability of the business environment and enhance its flexibility and appeal.

“These rules are in line with the UAE’s modern developmental model as well as its basic principles and fundamentals which are based on the principle of justice as well as respect for human rights while staying in front of any changes. This will ensure the UAE’s continuous development, stability, and the emergence of a new standing.”

““The new amendments will create an innovative ecosystem of mechanisms that enhance the business environment and productivity as well as flexibility within the labour market..” They also increase its appeal to business owners and the talents.”

UAE Labour Law Amendment Provide Maximum Job Security

The move will clear the way for employers and workers to reach an agreement on longer-term contract arrangements, thereby providing more security.

The amended law regulates working relations within the private industry.

This includes employees working in free zones as well as mainland companies except for those employed at the Dubai International Financial Centre as well as Abu Dhabi Global Market. Abu Dhabi Global Market.

The rules are not applicable to workers in the public sector or domestic workers.

“”The amendment seeks to protect both parties in a balanced manner, and while promoting the growth and stability of the labour market, the UAE’s economy,” the ministry said.

The labour regulations adopted in February reformed the working environment for private sector workers and allowed flexibility for employees, and reduced red tape for companies.

The changes had an impact on 4.9 million employees when the legislation passed in late 2021 overrode a law that was first written in the year 1980.

Further rules introduced earlier in the year were designed to make it simpler for businesses to employ workers on part-time contracts and also allow job share.

Employers are now able to offer people who are 15 or overpaid part-time work and also invaluable experience in the workplace.

The brand-new UAE Labour Law initially introduced the requirement that every employee in the private sector is required to be employed with fixed-term contracts not longer than 3 years’ length.

UAE employees and employers were worried that the slender nature of a fixed-term contract implied a lack of a long-term commitment in the working relationship which could make it harder for UAE firms to draw and keep talent.

“This was not in line with the increase in stabilized UAE labour market that was triggered through the introduction of residence and work visas.

“The UAE government has decided to address the concerns of both employers and employees by removing the three-year limit on employment contracts with fixed terms and allowing the parties to determine the duration as they wish. What exactly is this?” Whenever they want.”

So far, however, the situation under this law is that UAE Labour Law is as the following: (i) the parties to an employment contract can be able to agree on a time period of five, for instance, years or more; as well (ii) both parties of an employment contract can end the contract prior the expiration date by providing an unwritten notice of 30 to 90 days (as stipulated in the terms of the contract).

In reality, the arrangement is more like an employment contract with an unlimited term rather than a real one-year employment contract.

A lot of employers have granted three-year fixed-term contracts of employment to their employees to meet the requirements of changes to the UAE Labour Law.

Employers are faced with two choices: (i) leave the existing contracts in effect and then, upon expiry or renewal, extend the contract for the same or a longer period (or do nothing in any way) or (ii) extend the duration of the current employment contract with a signature of a written contract modification by employees.

Large employers typically go by option (i) to avoid the administrative burden of making additional changes to contracts,

“Those employers that have smaller workforces might be more likely to pursue alternative (ii). But, regardless of the size of their workforces, We anticipate that many employers will look to increase the tenure of important or senior employees whose departures could cause significant disruption to the company.”

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