On 15 September 2022 the UAE government issued a Federal Degree Law No. 14 of 2022 “the Amendment”, concerning the amendment of some provisions of Federal Decree Law No. 33 of 2021 on Regulation of Labour Relations. the new law amended the duration of the labour contract stipulated in article (8) clause (3) of the labour relations law.
The Old Clause:
“The employment contract shall be concluded for a determined period not exceeding (3) years, and its permissible with the agreement of both parties to extend or renew this contract for another similar period or for shorter period for once or more.” This means all employees must be employed on limited term not exceeding three years.
The New Clause:
“The employment contract shall be concluded for a fixed term and renewable as agreed by the parties”
Accordingly, the maximum period for the labour contracts of (3) (three years) has been abolished by virtue of article (1) of Federal Degree Law 14 of 2022 “the Amendment”.
The new clause in Labour Law revoked the obligation of maximum three (3) years in determining the duration of the employment contract. this amendment will allow parties to conclude their contract without sticking to the maximum three years period. However, Employers who turned their employees’ contracts into three years fixed term, after the completion of the three years, the Employers have the right to either renew the contract for the same period, diminish it, or increase the duration of the contract to any agreed period.
The new labour law granted the employers until 01 February 2023 to transfer their employees’ contracts into a fixed term contract. The limited contract is a type of employment contract valid for a specific period. Thoughtfully speaking, the new clause stipulated that the contractual relationship should be for a fixed term, which indicates that the Employment contract shall remain limited “not unlimited contract” and at the same time the period of the contract will be flexible according to the parties’ discretion.
The objective of the recent amendment is to protect the right of both parties in a proper manner and to increase the growth and stability of the Labour Market in the UAE.
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