Flexible work contracts in the UAE

On 15 November 2021, the UAE cabinet approved a new labour law which represented a complete overhaul of labour relations and business practices across the emirates.

The new provisions known as Federal Decree-Law No.33 came into effect on 2 February 2022 and addressed issues such as labour contracts, contract termination, gratuity settlements, maternity leave and diversity and inclusivity.

The changes came during the same period as new laws on entry and residency of foreigners and represented the largest legal reforms in the country’s history, designed to facilitate foreign investment and align the UAE with other recognised business practices around the world.

Federal Decree-Law No.33 has subsequently been amended through the issuance of Federal Decree-Law No.14 which addresses concerns around fixed-term contracts, the difficulty for employers to attract and retain talent and the need for flexible short-term contracts.

So, what are the key changes and how do they allow for more flexible labour contracts?

Updated Employment Contracts

Under the new labour law, Federal Decree No.33, we have seen the removal of unlimited term contracts with an update to the ‘fixed’ term contracts also known as limited term contract. Previously, all employees under a fixed-term contract were contracted for a maximum of three years with limitations on being able to exit the employment contract. However, after concerns were raised that the three-year limit lacked flexibility, making it hard to attract and retain staff, the cap has been removed.

The contract issued from the Ministry of Human Resources and Emiratisation (MOHRE) will mention a defined period for renewal, but this does impact the employment and unless notice is given from either party, the contract will be renewed automatically. It would be wise to add an auto-renewal clause within your internal employment contracts to prevent any confusion. Renewing the contract will be deemed as an extension of the previous one for final settlement purposes.

This is beneficial to the employer since it allows for more flexibility with contract periods and the possibility of attracting the best talent through longer-term contracts. For the employee it provides more certainty and job security. 

Employers are obligated to modify all existing employment contracts which refers to the new limited contract under Federal Decree No.33.

Flexible Work Models

The new law provides for six different work models which provide more flexibility with employment contracts and reflect the diverse ways in which people work and are employed nowadays. Employees can combine more than work model providing it doesn’t exceed the maximum number of work hours permissible by UAE law (48 hours a week).

The six models are as follows:

• Full Time – Working for a single employer for a full workday

• Remote Work – Allows for full or part-time employees to work completely or partially away from their recognised workplace

• Shared Job Model – This involves dividing a single job’s workload and pay among more than one employee. Contracts under this model are considered part-time and therefore subject to part-time regulations.

• Part Time – Working for one or more employers for fewer than full-time recognised hours.

• Temporary Work – A contract for a predetermined period of time that ends upon the job’s completion such as the UAE Mission Visa.

• Flexible Work – This contract allows employees the flexibility to work at different times and on different days depending on the requirements and conditions of the job.

The conditions that govern each of these working models are clearly defined in the executive regulations approved by the UAE Cabinet which state the responsibilities of both employers and employees.

Final Thoughts

These new labour contracts and flexible work models underline the UAE’s desire to have modern labour laws that reflect the diverse ways in which people work and provide allowances and opportunities for all. It will provide flexibility and increased opportunities for jobseekers that want the freedom to determine their own working conditions and it will provide clarity for employers on their responsibilities and allow them to attract and retain happier and more productive employees.

Employers have until 1 February 2023 to ensure that all their existing employment contracts are compliant with existing UAE labour laws or to ensure that employees contract terms appropriately reflect their working conditions.

How can PRO Partner Group help?

PRO Partner Group has close ties with key government departments as well as an expert HR team, who can advise you on the implications of the new labour law contracts for your company and how you can remain compliant with all HR requirements.

If you need guidance on the new labour law in the UAE or any other related HR services, PRO/visa, company setup, restructuring or local partner in Abu Dhabi, Dubai, the wider UAE, Oman, Saudi Arabia or Qatar, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.