Dubai: Imagine the tension in boardrooms and the relief in HR offices as the UAE Labor Law Update has officially extended the deadline for switching from unlimited-term to fixed-term employment contracts. Yes, you heard it right! The countdown clock has been reset, and the new date on the calendar is December 31, 2023.
Understanding the Context
The journey began with the enactment of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, commonly known as the “New Labour Law.” This law, which came into effect on February 2, 2022, mandated a significant change in the employment contracts of private sector businesses outside the DIFC and ADGM. These entities were required to convert all unlimited-term employment contracts to fixed-term contracts by February 1, 2023.
MoHRE’s Discretionary Power
However, the New Labour Law wisely included a provision that allowed the MoHRE to exercise its discretion in extending this deadline when deemed necessary for the “public interest.” Consequently, Ministerial Resolution No. 27 of 2023 was issued, granting an extension until December 31, 2023. This extension has been met with approval as it offers employers and employees additional time to ensure compliance with the New Labour Law.
Legal Implications and Recommendations
The extension of the deadline brings both opportunities and responsibilities. While employers can breathe a sigh of relief, they must remain vigilant. Failure to effect the necessary changes by the new deadline could expose companies to fines and penalties. Therefore, it is strongly recommended that employers who have not yet taken action initiate the process promptly.
1. Review and Revise Contracts
Firstly, companies must review and revise their employment contracts diligently. The transition to fixed-term contracts requires meticulous attention to detail to ensure compliance with the New Labour Law.
2. Engage with Affected Employees
Secondly, engaging with affected employees is paramount. Clear communication about the contract changes is essential to maintain employee relations and avoid misunderstandings.
3. Align with Visa Renewals
Employers should also consider aligning the term of the new fixed-term contracts with upcoming visa renewal dates. This strategic move not only reduces administrative burdens but also streamlines processes.
The extension offers a lifeline, but it should not be taken lightly. For those seeking guidance through this legal transition, it is advisable to consult with a legal consultant in Dubai. They can provide valuable insights on employee relations, and legal compliance.