The Biggest Change that will Affect Private Sector Employees

 

The biggest change that a large majority of the people are going to undergo with the new laws is the abolishment of unlimited contracts. As per UAE Law No. 8 of 1980, there were two types of contracts – Limited (Fixed Term) Contracts and Unlimited Contracts. They differed only in terms of rights and responsibilities.

 

Limited (Fixed-Term) Contract: The defining feature of this contract is that it mentions a specific employment period, including the start date and the end date. These contracts usually are valid for 2 or 3 years, with an option to renew if needed. They also include a notice for termination.

Unlimited Term Contract: The Unlimited Contract is open-ended in terms of duration of employment. Both the employee and the employer has the option to terminate the contract as long as they provide 1 to 3 months of the notice period and follow due procedures. There is no obligation for renewal.

 

However, this is not the situation anymore. Federal Law No. 33 of 2021 (New Laws) on the Regulation of Labour Relations states that all private sector establishments must draft and replace the existing contracts with new Limited-Term contracts that are in line with the new laws by February 1st, 2023. The new labour laws are the ones that came into effect on February 2nd, 2022.

Article 8 of the new law is what we are dealing with today, which talks about the requirements of the new employment contract and how it should only apply to a maximum of 3 years only. Your particular contract may vary from your friend in a different company depending on the characteristics of the job that you are contracted for – full-time, part-time, temporary or flexible.

 

Article (8) Employment Contract

  • A company or employer can enter a contract with a worker according to an agreed model of work, as mentioned above. A duplicate shall be made for the contract document and handed over to the employee. Furthermore, the document shall comply with the template prescribed in the Executive Regulations of this law.
  • The contract period should be within a defined period and shall not exceed more than 3 years. At the end of the contract period, the contract can be extended or renewed once or more than once for an equal or shorter period of time.
  • The advantage of extending the contract is that the renewed term will be added to the original term of service and shall be considered as a period of continuous service. 
  • In an event where both you as an employee continue to work for your employer beyond the original contract period, and after its expiry, without an explicit agreement, it is implied that the original contract will be considered extended without changes in conditions.
  • The Executive Regulations of this Decree-law shall determine the templates for the various types of employment contracts for various models of work. The decision shall depend on the approved skill levels of the employee and the provisions for the change of contract from one model to another.