UAE decides to do away with the 3-year cap on employment contracts

October 10, 2022by Admin0
EC

In the latest amendment to the Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations vide Federal Decree-Law No. 14 of 2022, it has been decided that the employment contracts in the private sector will from now on be created for any definite period subject to the consent of both the employer and employee.

3 -Year Cap on Employment

Earlier it was only possible to enter into an employment contract not exceeding three years. At the expiry of the three-year contract, parties were given an option to renew their contracts for a similar three-year period or shorter. This is often cited to be a reason for the lack of employment security. It also made it difficult for businesses in the UAE to enter into long-term commitments with professionally qualified individuals.

The latest move by the UAE is expected to boost the economic growth of the country by bringing in more talent which could be employed by businesses for long periods. This is also favorable to the employees who will now enjoy greater employment security in the country.

The new changes will apply to private sector employees in free zones and mainland companies, except for the Dubai International Financial Centre and the Abu Dhabi Global Market.

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