UAE Employment Law: Three-year cap on private sector employment contracts has been removed.

Based on significant amendments made to the UAE Employment Law law in November 2022, work contracts could not last more than three years. The Federal Decree-Law No. 33 of 2021, authorized by the late Sheikh Khalifa, stated that ‘all indefinite contracts must be converted into fixed-term contracts with the option of renewal.’

However, the UAE government has introduced a new amendment that went into effect in February 2022, in the Federal Decree Law No. 14 of 2022, by issuing a new directive that lifts the three-year restriction on the length of fixed-term employment contracts in the private sector.

Based on the new amendments, fixed-term contracts in the private sector still need to have a fixed duration, but the UAE Employment Law will no longer impose a restriction on the length of the contract.

The new regulations will enhance the development and stability of the labor market while boosting the UAE’s economic competitiveness.

The MOHRE says that contract renewals are permitted provided that both parties accept the terms.
According to officials, this change intends to safeguard all parties, promote the expansion of the labor market, and increase the UAE’s economic competitiveness.

Dr.Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, said: “The UAE government continues to develop regulations and UAE Employment Law that align with what the next 50 years of UAE’s development demand.

“The UAE Employment Law and regulations support our business environment’s stability and improve its resiliency and attractiveness.

“The regulations follow the UAE’s advanced developmental model, and its fundamentals and principles that are built on justice, respecting human rights and staying ahead of changes.”

“This guarantees the UAE’s continued progress, stability and pioneering stature.”

Al Awar further added: “The new amendments create an advanced ecosystem of mechanisms that boost the ease of doing business, productivity, and resilience within the labour market, while amplifying its attractiveness to the business owners and talents.”

UAE Employment Law

How does it benefit the company and its employees?

This amendment will provide the opportunity for companies and employees to settle on longer-term contractual agreements, increasing stability. The amended law governs the employment relations in the private sector. Apart from the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market, this applies to employees in free zones and mainland businesses. These legislations are not applicable to domestic workers and employees in the public sector.

Furthermore, the ministry added, “The amendment aims to protect both parties in a balanced way; it advances the labour market’s growth and stability and enhances the UAE’s economic competitiveness.”

These amendments that were implemented in February 2022 have completely changed the working environment in the private sector, enabling reduced red tape for organizations and increased flexible working hours for employees.

Additional amendments implemented earlier this year focused on making it easier for organizations to recruit workers for part-time employment and to allow for job sharing. Companies can now provide part-time employment to youngsters aged 15 and above, along with vital industry experience.

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