What are the new labor contracts that private sector employees are required to sign? How are they different from the previous contracts?

Date Posted:Thu, 9th Mar 2023

What are the new labor contracts that private sector employees are required to sign? How are they different from the previous contracts?

When signing the new contract, are there any aspects that an employee should pay special attention to? As an employee, what are the main things to keep in mind in terms of how the new contracts will affect my ability to change jobs, or any other benefits I may receive (like gratuity, leave entitlement etc.)

 

Fixed-Terms Contracts. 

In accordance with Federal Decree Law No. 33 of 2021 on the Regulation of Labor Relations in the Private Sector (which became effective on 2 February 2022), employees must be hired on a fixed-term contract. The term may be extended or renewed for a similar or shorter duration.

Renewal.

In the event that the contract is not renewed or extended upon its expiration, and the parties continue to meet their respective obligations under the contract, he contract is deemed renewed under its original terms and conditions. 

Deadline. 

The New Law entered into force on 1st February 2023, which requires all employees to move from unlimited term contracts to limited term contracts. However, on the 25th of January 2023, UAE Ministerial Resolution No. 27 of 2023 was approved, which extended the deadline for signing new contracts until the 31st of December 2023.

 

It is imperative that employers within the UAE who are subject to the UAE Labor Law adhere to the new deadline in order to avoid any sanctions or penalties imposed in the future

We always recommend reading all sections carefully prior to signing a contract in order to avoid any misunderstandings. However, when it comes to employment contracts, it is particularly important to carefully review the following clauses: 

• Date of Employment.

• Role \ position. 

• Probation period. 

• Working Hours. 

• Compensation Breakdown. 

• Bonuses \ shares if applicable. 

• Annual \ Sick Leaves. 

• Notice Period.

It is important to note that despite many of the above appearing obvious, the majority of employees are not fully aware of their rights and obligations. In particular, compensation breakdowns are important due to the fact that gratuity & Annual leave compensation are calculated on Basic Salary, While Notice period are calculated on Gross Salary. 

 

The court may consider bonuses, shares, or commissions to be part of a person's salary in some circumstances and can then calculate gratuities, annual leave compensations, and arbitral dismissals based on the new salary that has been calculated. 

 

This is a brief description of some of the notable changes included in the new law. As well, referring to the new law, there are no new provisions regarding changing jobs. In accordance with this, Employee is required to comply with all notices and contraindications to competition.