‘Is it mandatory for employees to switch to a limited-term contract?’

The new contract applies to all employees except those working in the DIFC and ADGM free zones, domestic workers and those employed by the UAE government

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Question: I have received a new employment contract from my company but it states that I will be on a limited-term contract.

I have always had an unlimited contract, so do I have to sign this?

I have read that I don’t have to agree to any changes and that the employer can only change my contract with my agreement.

I don’t want to be tied to a limited contract or have to pay a penalty if I choose to leave. CF, Dubai

Answer: Changes to the UAE's employment law came into effect in February 2021 with Federal Decree-Law No (33) of 2021 — Regarding the Regulation of Employment Relationship.

This made a number of changes that affect all UAE employees and employers, with the exception of two financial free zones, Dubai International Financial Centre and Abu Dhabi Global Market, domestic workers and those employed by the UAE government (although they tend to follow this law).

One of the main changes is that all relevant employees will switch to limited-term contracts.

This is stated in Article 8: “The employment contract is concluded for a specific term not exceeding three years and it is permissible, by agreement of both parties, to extend or renew this contract for another similar term or for a shorter term, for once or more.”

This has since been updated under Federal Decree Law No 14 of 2022, issued in October, which removed the three-year cap, thus enabling employers to agree to the duration of fixed-term contracts with their employees.

However, in all cases, contracts will be for a stated fixed term.

The main difference between the previous law and the new law is that there are no longer any penalties for breaking a fixed-term contract, either for the employer or the employee.

As far as most employees are concerned, the new contracts will operate much like unlimited ones.

All employers must update contracts of employment no later than February 1, 2023, to ensure that they are compliant with the law. The cost of this has to be borne by the employer and cannot be passed on to employees.

Any employers who fail to update contracts can be fined and will not be able to obtain or possibly even cancel visas until they comply with the law.

Watch: New UAE labour laws come into effect

I would also point out that this is the only change that should be made to any employee’s contract. Any other changes can still only be made with the agreement of the employee.

The new employment laws are designed to provide clarity for all parties.

Q: I have outstanding credit card debt with Emirates NBD, which I have been trying to pay off in full for months now.

Since leaving the UAE a few years ago, the payment functionalities on my online banking and app have been removed, leaving only the option to pay the minimum amount each month.

The balance in my current account is Dh27,880.83 and the debt on my credit card is Dh27,804.61, so it is sufficient to pay it off in full.

I have called the bank, but the calls drop out and I don’t get a reply to my emails. My debit card has not expired, but is inactive. However, my credit card has expired.

I have been trying to pay off the debt since September and have had to make several international telephone calls to no avail.

Another interest payment is now due. Is there anything you can do to help me with this situation? PL, UK

A: I contacted the bank and an investigation took place. Clearly, it just needed someone to take action as the bank’s system is not set up for calls from outside the UAE.

PL was contacted by the bank within a few days and informed that the outstanding balance would be settled as requested and that the account was being closed.

Shortly afterwards, a spokeswoman for the bank said: “We are pleased to inform you that our Group Customer Experience team has been in touch with [PL] and resolved the matter to her satisfaction.”

PL is happy with the outcome and appreciates the assistance of this column.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 20 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only

Updated: January 29, 2023, 9:56 AM