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The UAE recently announced the removal of the three-year cap on the duration of fixed-term employment contracts and the introduction of an unemployment insurance scheme for employees in the UAE.
Remove the three-year cap on fixed-term employment contracts
The UAE government has issued a new directive to remove the three-year cap on the duration of fixed-term employment contracts under the UAE Labour Law (UAE Federal Decree No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector).
Under the new amendments, fixed-term contracts must have a term, but no restrictions are imposed on the length of that term. Hence, employers and employees can now enter into fixed-term contracts of any duration between them.
The amendment deals only with the duration of fixed-term contracts, and the requirement in UAE labour law for employers to convert all employees currently on indefinite contracts to fixed-term contracts by 1 February 2023 remains unchanged. If you need our assistance in this regard, as well as support in reviewing and updating your policies and procedures to ensure that your UAE business operates in compliance with UAE labour laws, please do not hesitate to contact us.
Launch of Unemployment Insurance Scheme in UAE
The UAE has introduced an unemployment insurance scheme as part of reforms aimed at attracting more talent and investment to the region.
The new plan was initially possible Compensation for up to three months of unemployed insured public and private sector employees in 2022. Employees are required to pay a premium to the insurance plan (AED 40 to 100 ($10.90 to $27.23) per year) to be eligible.
Unemployed individuals will be able to claim 60% of their basic salary, or up to AED 20,000 ($5,446) per month, if certain conditions of the program are met. The new scheme will provide a safety net for employees within the UAE, covering both UAE nationals and expatriates.
The introduction of this social security system in the UAE also brings it in line with other Gulf countries – Saudi Arabia, Oman, Qatar and Kuwait have previously offered citizens some form of unemployment support. Bahrain also provides a form of unemployment insurance for resident non-citizen workers and citizens.
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