The UAE’s amendment to fixed-term employment contracts is mandatory for all private sector companies and must be completed by the February 1 deadline, the Ministry of Human Resources and Emiratisation says.
In October last year, the UAE government lifted the three-year cap on the duration of private sector fixed-term contracts as part of its reforms to the country’s labour laws.
In recent years, the UAE, the Arab world’s second-largest economy, has introduced a number of economic, legal and social reforms to strengthen its business environment and increase foreign direct investment.
It also aims to attract skilled workers with new visas and provide incentives to companies to set up or expand their operations in the UAE.
The UAE employment market has also made a strong recovery from the coronavirus-induced slowdown, boosted by the government’s fiscal and monetary measures.
“The UAE government continues to develop regulations and laws that align with what the next 50 years of UAE’s development demand,” Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, said last October, when the amendment was announced.
“The laws and regulations support our business environment’s stability and improve its resiliency and attractiveness.”
Here is everything you need to know about the changes to the UAE’s private sector employment contracts.
What changes have been made to employment contracts in the UAE?
In February last year, the UAE government introduced new legislation that updated the country’s labour laws.
Under the amendments, private sector employees’ permanent or indefinite contracts would be replaced with renewable three-year contracts.
However, in October, the government issued Federal Decree-Law No 14 of 2022, which removed the planned three-year limit on fixed-term employment contracts.
This means that private sector companies are now required to issue new contracts that cover a defined term of employment, which can be renewed “subject to an agreement by both parties to a contractual relationship”, the Ministry of Human Resources and Emiratisation said.
However, there will no longer be a limit on the length of the contract, it added.
It also means that employers and employees must agree on the duration of the contract.
“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,” Mr Al Awar said at the time.
What is the deadline for the new contracts to be completed?
All private sector employers must transfer to the new contracts by Wednesday, February 1.
Companies that fail to meet the deadline risk being fined by the Ministry of Human Resources and Emiratisation. It is not yet known what the penalty will be.
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Is it mandatory for all employees in the UAE to sign a new contract?
Yes, it is mandatory for private sector employees to sign the new contract.
However, employees working for companies operating in the financial free zones of Abu Dhabi Global Market and Dubai International Financial Centre are exempt, as are domestic workers.
Will employees have to pay for the new contracts?
No, the cost of transferring the new employment contracts is paid for by the employer and they cannot pass this on to employees.
Will this affect my job?
No, it will not affect your day-to-day responsibilities.
However, it will allow private sector companies and employees to agree on part-time work, job sharing and other tasks, the Ministry of Human Resources and Emiratisation said.
The amendment also aims to protect both parties in a balanced way that advances the labour market’s growth and stability and enhances the UAE’s economic competitiveness, it 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,” Mr Al Awar said.
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What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
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The bio
Favourite book: Kane and Abel by Jeffrey Archer
Favourite quote: “The world makes way for the man who knows where he is going.” - Ralph Waldo Emerson, American essayist
Favourite Authors: Arab poet Abu At-Tayyib Al-Mutanabbi
Favourite Emirati food: Luqaimat, a deep-fried dough soaked in date syrup
Hobbies: Reading and drawing
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- Premier League-standard football pitch
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Daily visitors to Dragon Mart in 2010: 20,000
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Start the week as you mean to go on. So get your training on strong on a Monday.
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Think about what you’re training or eating a certain way for — don’t, for example, get a six-pack to impress somebody else or lose weight to conform to society’s norms. It’s all nonsense.
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And last but not least, you should always, always chill on Sundays.
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