What has changed?
The maximum three-year limit for fixed term contracts has been removed.
While contracts still require to be for a limited term, employers now have flexibility with regards to the length of the term.
We have already prepared and have been using our new contract templates (and issued contract amendments converting unlimited term contracts to limited term contracts). Do we need to change all of our contracts again?
Unlikely. We expect that the majority of employers will be able to keep their current fixed term contracts in place and revisit the term if they wish to do so, once the initial term has expired.
What is the impact of this change?
We expect that most employers will continue to align the contract term to the government (or free zone contract term) or the visa and provide for automatic renewal.
Is there anything else I should know?
Now you mention it, yes.
The UAE also issued a law introducing an unemployment insurance scheme which aims to provide employees with income support for up to three months upon the termination of employment. Financial support provided under the scheme will be 60% of the subscription salary (capped at a maximum of AED 20,000 per month). The unemployment scheme is another step designed to attract and keep talent within the UAE.
The scheme is available to all workers in the private and federal government sector (with some limited exceptions) provided that basic eligibility criteria is fulfilled (such as the employee completing a 12-month scheme subscription period and not having been dismissed on disciplinary grounds).
Further details of the scheme, including the party liable to pay the subscriptions and the level of those subscriptions, are still to be released.
To speak to us in relation to any employment law related matters, please reach out to the Baker McKenzie contacts below.
