According to the UAE Federal Decree-Law No. (33) of 2021, private sector employers have until December 2023, to change all employment contracts from Unlimited-Term to Limited-Term contracts. Employers in Abu Dhabi Global Market (ADGM) and Dubai International Finance Centre (DIFC), as well as those employing domestic workers are exempt from this requirement.
The Limited Contract applies to both mainland and free zone entities. It is a modification of existing contracts (not new contracts) and in most cases will not affect the expiry date. Assuming this is correct, employees current EID and Labour Cards would be unaffected.
All contracts will need to be updated before December 2023. Avoid the panic and get your employees contracts updated as soon as possible.
Employers are encouraged to review and manage the conversion of existing Unlimited-Term contracts into Limited-Term contracts to avoid incurring fines and labour file sanctions.
FREQUENTLY ASKED QUESTIONS
WHAT IS A LIMITED TERM CONTRACT?
A Limited Term contract is a fixed term contract and is usually tied to the duration of your UAE residency visa (i.e., 2 or 3 years depending on your employer’s location). It will automatically terminate at the end of the term unless terminated earlier by either party or renewed by both parties.
HOW TO CANCEL A LIMITED TERM CONTRACT?
Limited Term contracts can be terminated by the employer by providing 30 days notice. The maximum notice period as per UAE labour law is ninety (90) days.
WHAT IS THE PROBATION PERIOD?
Probation period enables the employer to evaluate the performance of the employee and allows the employee to become familiar with his job duties and the work environment, according to which the employment contract is either continued or terminated as per the provisions of labour law.
CAN THE LIMITED TERM CONTRACT BE TERMINATED DURING THE PROBATION PERIOD?
The maximum probation period cannot exceed six months from the date of commencement of work. Employers can terminate the contract during the probation period by notifying the employee at least 14 days before the date specified for the termination of service.
Contact Creation Business Consultants for assistance with the documentation and contract conversion process for your employees [email protected] or call UAE +971 4 878 6240.
