Fixed-term contracts

According to Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector, the ‘UAE Labour Law’ (which came into effect as of 2 February 2022), a worker can be hired on a fixed-term employment contract for up to three years. The term may be extended or renewed for a similar or shorter duration.

If the contract is not renewed or extended upon its expiry, and the parties continue to perform the obligations of the contract, the contract is then considered renewed under the same terms and conditions as those of the original contract.

Any extension or renewal of the terms of the employment contract will be added when calculating an employee’s end of services benefits.

The law also stipulates that unlimited employment contracts are to be converted into fixed-term employment contracts, in accordance with this decree law, within one year of the effective date of the existing contract and may be extended by the Cabinet for further periods as required in public interest. Meanwhile, the provisions of this decree law shall also apply to unlimited employment contracts entered into in accordance with the Federal Law No. 8 of 1980.

Probation period

The probation period of the employee must not exceed six months, or be extended for another term. When the employee completes the probation period and continues in service, the probation will be calculated as part of his service.

If the employer wants to terminate the employee for any reason during the probation period, he has to give 14 days’ prior written notice.

If an employee wants to change the job while on probation, to join another employer in the UAE, he has to give the employer a written notice of minimum one month. In this case, the new employer has to compensate the current employer for the employee’s recruitment cost, unless it is otherwise agreed between the current employer and the employee.

However, if an employee resigns from his employment during the probation period, with the intention to leave the job and the UAE, he must provide prior written notice of 14 days.

Should the resigning employee return to the UAE within three months of his departure on a new work permit, the new employer will be liable to compensate the previous employer for the employee’s recruitment costs, unless otherwise agreed between the current employer and the employee.

Non-compete restrictions

Article 10 of the UAE Labour Law permits employers to include non-compete restrictions in the employment contracts. These restrictions must be limited to the extent necessary to protect the business’s legitimate interests and defined in respect of time, place and the nature of work. The maximum restrictive period is for two years from the date of the expiry of the employment contract.

Types of work arrangements

The Labour law admits four models of work arrangements as follows:

• Full time – under this system, an employee works for one employer only on a full-time basis.
• Part time – under such contract, an employee works for one or more employers for a specific number of hours or days.
• Temporary work – under this system, an employee works on a specific assignment and the contract ends upon its completion.
• Flexible working – under this system, working hours or days may change depending on the business needs of the employer.