Amendment of the Labor Law Allows for the Conclusion of an Employment Contract Without a Maximum Duration Limit

Effective September 29, 2022, the Ministry of Human Resources and Emiratization (MoHRE) has brought into force an amendment vide Federal Decree law No. 14 of 2022 amending some provision/s of Federal Decree – Law No. 33 of 2021 which primarily deal with the Regulation of Labor Relations. The amendment primarily relates to abolishing the maximum duration which had been set at three years for the employment contracts. The text of clause (3) of Article (8) of Federal Law Decree No. 33 of 2021 prior to the amendment stated that “the employment contract shall be concluded for a specified period not exceeding three years and may be renewed or extended by agreement of the parties for another similar period or for a shorter period of one or more times.” However, post amendment, the new law now stipulates in its first article that the text of paragraph (3) of Article (8) of Federal Decree-Law No. 33 of 2021 shall be replaced by the following text: “The employment contract shall be concluded for a specified period renewable as agreed by the parties”.

As can be seen, the new amendment clearly abolishes the maximum duration of the employment contract that was earlier limited to three years. It has given freedom to both the parties i.e., an employer and an employee, to agree on the period they deem appropriate in accordance with the nature of the work and the interests of the parties. There is no regulated maximum fixed term anymore under law for such employment contracts. In other words, the duration of the contract has been left between the parties to decide. This step is likely to achieve stability in the labor market which would reassure the employer of the proper functioning of work as he would be at liberty to fix the term or duration of the contract, and at the same time, it shall also ensure the worker of stability of his/her employment. Further, it is also clear from the text of the amended article that the parties to the contract may also agree to renew the same contract after the expiry of its term as per the terms and for any duration to which they agree.

Reda Hegazy  is a Senior Associate at Alsuwaidi & Company.

Reda is listed Legal Consultant in the Government of Dubai Legal Affairs Department, a Member of the DIAC 40, Young Practitioners Group in Dubai International Arbitration Centre (DIAC), a certified arbitrator and member of the International Commercial Arbitration Centre (ICAA) in Sharjah (Tahkeem).

To speak to Reda directly, contact him at reda.hegazy@alsuwaidi.ae 

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