24 January 2023
Impact High
Summary
In line with the UAE’s new labour law which came into force in February 2022, all indefinite contracts had to be changed into fixed term agreements of a duration of up to three years. The three year cap was then lifted and parties have the freedom to opt for any contract duration as long as it specifies a definite term.
The Detail
In October 2022 the UAE’s Ministry of Human Resources and Emiratisation (MOHRE) provided greater flexibility by taking away the limit on the duration of labour contracts. Employers have had a ‘grace period’
from February 2022 to 1 February 2023 to amend indefinite employment contracts to limited term contracts. The UAE Government has addressed concerns from both employee and employer’s side by removing the cap of three years on fixed-term employment agreements. It now allows both parties to stipulate any term duration agreeable by employee and employer, with the objective of protecting the rights of both parties and increasing the stability of the labour market.
What this means
Indefinite contracts should be changed to fixed-term agreements by 1 February 2023. The current Labour Law stipulates that all companies in the UAE that follow mainland labour law must transition their employees onto fixed term contracts.
UAE Mainland – Unlimited contracts will need to be amended to contracts of a fixed duration by way of a ‘Labour contract amendment’ request submitted to the Ministry of Human Resources and Emiratisation
(MOHRE) before the deadline of 1 February 2023.
UAE Free Zone – Companies incorporated in the Freezone (except DIFC and ADGM) will also need to comply with the new labour law, however, most Freezones have stipulated that companies are not required to notify the concerned Freezone authorities of the contract amendment. The new contract duration can be mutually agreed internally between parties unless there are any changes to the employee’s basic salary. In this case an amendment to the salary would need to be submitted to the relevant Freezone authorities in order for the changes to be reflected on the employee’s records.
How we can help
We will continue to closely monitor and provide timely guidance on any new updates by the UAE
Immigration and Labour authorities, and highlight the impact of any changes to your expatriate workforce.
Contact us
Should you have further questions on this update, please reach out to:
● Anir Chatterji – Partner, EMEA Immigration: anir.chatterji@vialto.com
● Rekha Simpson – Director, Middle East Immigration: rekha.simpson@vialto.com
● Dounia Fathi-Benbrahim – Senior Manager, Middle East Immigration: dounia.fathi-benbrahim@vialto.com
● Ananth Prasad – Manager, Middle East Immigration: ananth.prasad@vialto.com
Further information on Vialto Partners can be found on our website: www.vialtopartners.com
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