On the 15th of September 2022, the UAE has carried its first amendment to Federal Decree No. (33) of 2021 on Labour Relations (“Labour Law”) through Federal Decree No. (14) of 2022 (“Decree”). The Decree effectively amends Article 8 (3) of the Labour Law.
The previous Article 8(3) of the Labour Law restricted the term of employment contracts to a maximum of 3 years renewable to similar or shorter periods. It provided that:
“The Employment Contract shall be concluded for a determined period, not exceeding (3) three years, and it is permissible, with the agreement of both parties, to extend or renew this contract for another similar period or for a shorter period, for once or more.”
Accordingly, employment in the UAE could not exceed the specified term of three (3) years. Hence, if the parties wished to extent the term of the contract, the same could only be affectively extended at the expiry of the limited term.
However, Article (1) of the Decree lifts the three (3) years restriction to the employment contract term and alternatively allows the parties to determine the contract’s term which may further be renewed as agreed upon between the parties. Additionally, Article (2) of the Decree abrogates any article or provision of the Labour Law that negates the new amendment.
The new amendment aims to award both employees and employers the freedom and discretion of determining the suitable contract term on the basis of the work nature or...
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