New UAE labor law on private sector employment contracts: 3 things you need to know

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New UAE labor law on private sector employment contracts

UAE private sector companies shall update work contracts according to the new law on Regulations of Labor Relations in the Private Sector.

Here are three points in the new law you must know upon signing contracts.

1. All contracts are now fixed-term with three years maximum renewal.

According to Dr. Ibrahim Al Banna, CEO of Ibrahim Al Banna Advocates and Legal Consultants, several changes were made in the new law, including the elimination of “unlimited term of employment’ and their replacement with fixed-term with “a maximum duration of three years” that may be renewed for a similar or lesser period.

Al Banna reiterated that all companies can set the duration of work contracts.

“The duration of the employment contract must be mentioned by the employer, which could be of any period,” Al Banna said.

The Ministry Of Human Resources & Emiratisation (MOHRE) also announced the lifting of the three-year restriction on fixed-term contracts.

2. New contracts may have an auto-renewal clause

Al Banna said many companies who have already changed their employment contracts have opted to include a renewal provision to ensure that their employment contracts do not terminate at the end of the term. He reiterated that an employee should pay close attention to the contract’s term or length and its auto-renewal clause.

3. Notice period remains unchanged

Under the new law, both the employer and the employee must notify the other party of their intention to end the working relationship. The duration of the notice period under the new law stays unchanged. It can be anywhere between 30 and 90 days unless both parties agree otherwise.

According to Al Banna, The new law does not affect the employee’s ability to change jobs because he or she can quit his or her existing job by giving notice for the period specified in the employment contract. Similar to the previous labor law, employees shall receive all the end-of-service benefits.

Signing a new contract? Check these important details

-Date of employment
-Role/position
-Probation period
-Working hours
-Compensation breakdown
-Bonuses/shares, if applicable
-Notice period

Shebab Abdelrehem, a legal consultant at Hussain Lootah and Associates, Attorney, and Counsellor at Law, advised reading all sections carefully before signing a contract to avoid any misunderstanding.

“It is particularly important to carefully review some clauses,” Abdelrehem said.

He added that most employees are not fully aware of their rights and obligations, and that compensation breakdowns are important because gratuity and annual leave compensation are calculated on basic salary. RZSP/Expat Media


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