UAE extends February deadline for fixed-term employment contract switch

Businesses now have until the end of the year to move workers from unlimited contracts

Companies had been asked to change the contractual status of workers by February 2, but this has been pushed back to December 31. Photo: Getty Images

The UAE has extended the deadline for private sector companies to switch unlimited employment contracts to fixed-term agreements to the end of the year.

Companies had been asked to change the contractual status of workers by Thursday, but this has now been pushed back to December 31.

The Ministry of Human Resources and Emiratisation said on Monday the move would give businesses additional time.

The National last week told of the challenges companies were facing in meeting the deadline and avoiding the prospect of financial penalties.

“The decision stems from our belief in enhancing flexibility, competitiveness and ease of business for private sector companies and safeguarding all parties’ rights,” the ministry said.

“Providing enough time for companies to change the contracts supports the labour market; our role is providing all the necessary tools for companies to succeed and flourish; ease of business is definitely an important approach that we adopt in the market.

“The private sector is a partner in the UAE’s development journey. We value its contributions to the UAE’s GDP. We have recently witnessed the private sector’s achievements in Emiratisation, which significantly helped to raise the overall rates of Emiratisation in the UAE.”

Initially, it was announced that companies must provide a fixed three-year contract for all staff. However, the government scrapped this in October and allowed employers to agree on the duration with employees.

This led to many companies who had submitted proposals before October having to redraft contract agreements.

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“There are a lot of companies that are trying to scramble together and make sure everything is ready ahead of the deadline,” Sabrina Saxena, senior counsel with law firm Al Tamimi and Company, told radio station Dubai Eye.

“That’s partly because the labour authorities changed their position over the last few months in terms of the templates they were putting together.

“The term of the contract used to have a three-year cap but the labour law was changed towards the end of last year, so now a lot of companies are trying to get to grips with the changes and put the contracts in place.”

The changes to employment contracts affect all workers in the UAE unless they are in the Abu Dhabi Global Market and Dubai International Financial free zones.

Families employing domestic workers are also exempt from the changes, which are being introduced to allow companies and staff to agree on part-time work, job sharing and project-based tasks with more ease.