Dubai: One of the most significant changes that will come into effect with the UAE’s new Labour Law is the switch to three-year work contracts.
While earlier contracts were largely categorised as limited or unlimited, the new labour law – Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations – stipulates that contracts shall be concluded for a definite period of time, which does not exceed three years. The employment contract may be extended or renewed once or more than once, for an equal or a shorter term, as per the new law.
Renewal of contracts
Also, Article 8 (5) of the law covers the conditions in which a contract would be considered to be extended. It states: “Where the parties continue to perform the contract after the expiration of its initial term or the completion of the agreed work without an explicit agreement, the initial contract shall be deemed to have been extended on the same conditions by implication.”
However, there are certain cases that have been clearly laid out in Article 42 of the new law, in which the employment contract will be considered terminated. For example, in the event of death of the employer (with some exceptions) or employee, or if the employer goes bankrupt, or the employee is convicted in certain legal cases.
Here is a detailed look at what Article 42 of the new law states:
ARTICLE (42) - CASES OF END OF EMPLOYMENT CONTRACT
An employment contract shall terminate in any of the following events:
1. By mutual written agreement of the parties.
2. The expiration of the term of the contract, unless it is extended or renewed pursuant to the provisions hereof.
3. Upon the will of either party, subject to the provisions of this Decree-Law in relation to termination of Employment Contract and Notice Period agreed upon in the contract.
4. Employer's death unless the subject of the contract is connected with his person.
5. Worker's death or permanent total disability, as evidenced by a certificate from the Medical Institution.
6. If the Worker is convicted by a final order to a custodial penalty for a term of not less than three months.
7. The permanent closure of the establishment, pursuant to the legislation in force in the UAE.
8. If the employer becomes bankrupt, insolvent or unable to continue in business for any economical or exceptional reasons, in accordance with the conditions, controls and procedures set by the Executive Regulations and the legislation in force in the UAE.
9. If the worker does not meet the conditions for renewal of the work permit for any reason outside the control of the employer.
The new labour law, announced by the UAE, has introduced a raft of amendments and employment reforms that empower employees in the private sector.
Private companies and establishments must replace unlimited contracts with three-year fixed-term contracts within a year from tomorrow.
Employers have been given a deadline of February 3, 2023, to replace their existing unlimited contracts. New contacts issued will be 3-year limited contracts.
Starting tomorrow, February 2, contracts will be issued to govern the responsibilities and rights of employees and employers in each of the six job models introduced under the new labour law. These include shared jobs, part-time, full-time, temporary, flexible and remote work.
The Ministry of Human Resources and Emiratisation said contracts need to include complete information about the employees, employers and nature of work. Working hours and weekends must be stated in the agreement.
The information that should be written in the employment contract includes - the job or profession, joining date, place of work, rest days, working hours, probation (if any), the duration of the contract, the wage (including benefits and allowances), annual leave, notice period, and procedures for contract termination.
Other information to be included are the name and address of the employer, the worker’s name, nationality, date of birth and qualifications.
Any other data determined by the ministry must also be included in the contract.
Workers and employers are allowed to introduce new clauses to the approved contract forms in accordance with the UAE labour law.
Contracts are renewable every three years or less, depending on the agreement of both parties. The extension will be added to the worker’s end-of-service gratuity.
Contracts can also be changed from one work model to another based on an agreement between both parties. Employers need to ensure that the entitlements of the first contract are entirely met before changing the job model for employees.