Picture for illustrative purposes only. ARCHIVE

The UAE government has published Federal Decree-Law No. (14) of 2022, amending the new law that took effect in February 2022. According to Ben Brown, UAE Partner - Employment at Addleshaw Goddard, the new UAE Labour Law initially mandated that all employees in the private sector be engaged on fixed-term contracts of no more than three years. He stated that both companies and employees in the UAE were concerned that the limited nature of a fixed-term employment contract implied a lack of stability in the working relationship, making it more difficult for UAE enterprises to attract and retain talent. “This ran contrary to the increased stability in the UAE labour market brought about by the introduction of long-term residence and work visa options,” said Brown. “The UAE Government has acted decisively to address the concerns of both employers and employees by removing the cap of three years on fixed-term employment contracts and allowing the parties to agree to whatever length of term they wish.” The expert explains that as things stand, therefore, the position under the UAE Labour Law is as follows: (i) the parties to an employment contract may agree on a term of, for example, five years; and (ii) the parties to an employment contract may terminate the contract before its expiry by giving written notice of between 30-90 days (as agreed in the contract). In practice, this arrangement reflects an unlimited-term employment contract more closely than an actual fixed-term one. According to him, many firms will have already given their staff three-year fixed-term employment contracts to comply with the new UAE Labour Law. Those employers will have two main options: (i) leave the existing employment contracts in place and then, on expiry, renew the contract for the same or longer term (or not renew at all); or (ii) increase the term of the existing employment contract by way of written contract variation signed by the employee. “We expect most large employers will proceed with option (i) to save the administrative burden of making further contractual amendments,” said Brown. “Those employers with smaller workforces may be more inclined to proceed with option (ii). However, regardless of the size of their workforce, we anticipate that most employers will consider increasing the terms of very senior or influential employees whose departure would likely cause material disruption to the business.” The deadline for transitioning all employees to fixed-term contracts under the new UAE Labour Law remains February 2023. BKM/ Expat Media
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