Dubai: Have you signed a revised labour contract yet? If you are working in the UAE’s private sector, you may have already been asked by your employer to sign a new work contract, which is in line with Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector and came into effect on February 2, 2022. If you haven’t, your company has until the end of the year to update all the labour contracts of its employees. Here are three things you need to know about the new work contracts.
1. All contracts are now fixed term
Dr Ibrahim Al Banna, CEO of Ibrahim Al Banna Advocates and Legal Consultants, said many changes were introduced when the new UAE Labour Law – Federal Decree-Law No. 33 of 2021 – came into effect, including the elimination of ‘unlimited contracts'.
“Several modifications were enacted by the New Labour Law, including the elimination of unlimited term of employment contracts and their replacement with fixed-term agreements with a maximum duration of three years that may be renewed for a similar or lesser period. Later, MOHRE announced the removal of the three-year limit on fixed-term contracts with Federal Decree-Law No. 14 of 2022. With this amendment, employers are free to determine the length of employment contracts,” Dr Al Banna said.
He added that the duration of the employment contract must be mentioned by the employer, which could be of any period.
2. Your new contract may have an automatic renewal clause
“Many employers who have already amended their employment contracts have chosen to incorporate a renewal clause, to ensure that their employment contracts do not cease at the conclusion of the term … an employee needs to look closely to the term or duration of the contract and its auto-renewal clause,” Al Banna said.
Many employers who have already amended their employment contracts have chosen to incorporate a renewal clause, to ensure that their employment contracts do not cease at the conclusion of the term … an employee needs to look closely to the term or duration of the contract and its auto-renewal clause.
3. The notice period remains unchanged
If the contracts will now be considered automatically renewed when the term is complete, what happens when you wish to quit from your job? According to Dr Al Banna, both the employer and the employee are required to give the other party a notice for the decision to end the work relationship. The duration of the notice period in the new law remains unchanged – it can be anywhere between 30 to 90 days, unless agreed upon otherwise by both the parties.
“The new law doesn’t change the employee’s position when it comes to switching jobs, as he or she can resign from his or her current job by giving the notice as agreed upon in the employment contract for the number of days to be served and he or she shall receive all the end-of-service benefits, similar to the previous labour law,” Al Banna said.
Signing your new contract? Check these 7 details
Going through the fine print of any contract is never easy, but knowing the details of your contractual relationship with your employer is important.
Shehab Abdelrehem, legal consultant at Hussain Lootah and Associates, Attorneys and Counsellors at Law, advised employees to pay special attention to seven specific aspects of the work contract.
“We always recommend reading all sections carefully prior to signing a contract to avoid any misunderstandings. However, when it comes to employment contracts, it is particularly important to carefully review some clauses,” Abdelrehem said.
1. Date of employment
3. Probation period
4. Working hours
5. Compensation breakdown
6. Bonuses/shares, if applicable
7. Notice period
“Despite many of the above appearing obvious, most employees are not fully aware of their rights and obligations. Compensation breakdowns are important because gratuity and annual leave compensation are calculated on basic salary,” he said.
We always recommend reading all sections carefully prior to signing a contract to avoid any misunderstandings. However, when it comes to employment contracts, it is particularly important to carefully review some clauses.
He added that in situations where a labour case is taken to court, the judge may even take into consideration bonuses, shares, or commissions to be part of a person's salary in some circumstances to calculate gratuities, annual leave compensations, and arbitrary dismissals based on the new salary.
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