The UAE government recently issued Federal Decree-Law No. (14) of 2022, which amended the new law that came into force in February 2022.
Ben Brown, UAE Partner – Employment, Addleshaw Goddard explained that the new UAE Labour Law initially introduced a mandatory requirement that all employees in the private sector be employed on fixed-term contracts of no more than three years' duration.
He pointed out that UAE employers and employees were concerned that the limited nature of a fixed-term employment contract indicated a lack of permanence in the employment relationship, arguably making it more difficult for UAE businesses 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 a term of, for example, 5 years; and (ii) the parties to an employment contract may terminate the contract prior to its...
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