New amendment to remove the three-year cap on fixed-term employment contracts

At a glance

• A recent amendment to the Labour Law has seen the removal the three-year cap on fixed term employment contracts.

The UAE has recently issued Federal Decree-Law No. 14/2022 (amendment) which amends provisions of Federal Decree-Law No. 33/2021 (Labour Law). Under the Labour Law, which came into force on 2 February 2022, employers are required to ensure that private sector employees are moved across to fixed term employment contracts by February 2023, and that new hires before this date are onboarded on fixed term employment contracts. In all cases, the contracts were to have a maximum duration of three years.

However, the introduction of the recent amendment has seen a backtrack, with the cap of three years removed. Although there is no longer a cap on the length of the fixed term employment contracts, they still need to be for a defined term – meaning employers could, in theory, set longer terms of e.g. 5 or 10 years.

The deadline imposed by the Labour Law to convert existing unlimited employment contracts to fixed term contracts remains unchanged by the recent amendment.