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Now contracts can be renewed and remain in force as long as both employer and employee agree to the stated conditions
The UAE government on Friday issued a new directive that will remove the two- and three-year caps on fixed-term employment contracts in the private sector.
In an update to the new labour law that came into effect in February, the Ministry of Human Resources and Emiratisation (Mohre) announced Amend the Employment Relations Management Act.
According to the Ministry of Industry and Information Technology, according to new amendment, Employment contracts must cover a definite period – however, the law no longer sets limits on contract duration.
The contract can be renewed and remains in force as long as both the employer and the employee agree to the stated conditions.
Explaining the latest changes, lawyer Ashish Mehta noted that previously, “the employment contract used to be synchronized with the employee’s visa status”. This means these contracts are limited to two and three-year visa validity periods.
“However, with the new announcement, Mohre’s contract could be much longer than the applicant’s visa status,” said Mehta, founder and managing partner of Ashish Mehta and Associates.
Dr Abdulrahman Al Awar, Minister of Human Resources and Emirate, said the changes will create an ecosystem of advanced mechanisms that will increase the productivity, resilience and ease of doing business in the labour market.
Mohre said in the statement that the amendment aims to protect both parties, promote growth and stability in the labour market, and enhance the UAE’s economic competitiveness.
“The UAE government continues to develop regulations and laws that are in line with the UAE’s development needs over the next 50 years,” said Al Awar. “The laws and regulations support the stability of our business environment and increase its resiliency and attractiveness.”
Reviewing changes in labor laws
UAE amends labour laws to introduce Flexible working mode For post-coronavirus workplaces in November 2021.
Under the new law, which came into effect on February 2 this year, indefinite contracts should be changed to fixed-term contracts.
It also provides that “workers may be employed on fixed-term employment contracts of up to three years”, which can be extended or renewed for a similar or shorter period.
The latest amendments, announced on Friday, stipulate that employment contracts must cover a specific period – but the law will not cap the length of contracts.
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what the experts say
The changes have created “a more balanced ecosystem between employers and employees,” said Vijay Gandhi, Korn Ferry’s EMEA regional director.
Mehta also said the decision was “very beneficial” for both employers and employees.
“All these reforms that have taken place over the past few years have propelled the UAE to be the best country to live and work in,” he added.
Gandhi said the removal of the cap on the duration of contracts was also timely given the competitive job market.
“As the current war for talent escalates, organizations are asking two questions: How long should our employment contracts be – fixed or indefinite? My employees want to know: Will I agree to a renewal?” he said .
“The job market is fiercely competitive for top talent in key disciplines, especially in science, technology, engineering and mathematics. Many employees are taking the opportunity to take action and ensure they have access to growth, promotion or a better work environment.”t success with their current employer,” Gandhi added.
He said the new regulations provided flexibility for “a fluid job market, with more gig workers expected by 2025”.
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