MoHRE extends grace period in which to move to fixed term contracts in the UAE to 31 December 2023

Employment law

27-01-2023

Overview

The Ministry of Human Resources and Emiratisation (MoHRE) has announced that the end of the grace period for private sector employers moving from unlimited term to limited, or fixed, term contracts has been extended from 1 February 2023 to 31 December 2023.

Summary

The new labour law in the UAE (Federal Decree Law No 31 of 2021) introduced a mandatory requirement that all contracts of employment outside of the DIFC and ADGM should be of a fixed term nature. Employers were given a 12 month grace period in which to transition unlimited, or indefinite, term contracts for both existing and new employees to a limited, or fixed, term basis. When the new laws were first passed the maximum duration of a fixed term contract was stated to be three years however this cap was removed in October 2022 meaning that employers can now determine the duration of the fixed term. The original deadline for updating and filing revised, and compliant, contracts was 1 February 2023. Ministerial Resolution 27 of 2023 confirms that the initial 12 month grace period to 1 February 2023 has now been extended to 31 December 2023.

What now?

This change will no doubt be of comfort to those employers who had not yet been able to inform their staff of the need for change, or to present the new contracts to their employees. This said, although the task of amending the contracts and putting in place a communication plan for your staff can now move down your action list for the year we would not recommend dropping it to the bottom of your list.

We recommend that you continue with the momentum to:

review and revise your contracts
ensure any new starts are engaged on the new form of limited term contract
ensure any promotions or change of role positions are engaged on new form of limited term contracts
prepare a communication and information cascade plan to engage your existing employees ahead of the end of the year

Finally, in light of the fact that employers now have an additional 11 months in which to implement the new form contracts, employers may consider staggering the implementation of new fixed-term form contracts to their existing employees, in order to align with any upcoming employee visa renewals that are due to take place this year. In essence this would allow employers to align the term of the new contracts with the visa term, and in turn help reduce the administrative burden of having two expiry dates that do not run in tandem.

How can we help?

If you have any questions in relation to this update, or employment law in general, please don't hesitate to contact us.

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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