Fixed-term employment contracts are common in the UAE, where employers can hire employees for a specific period. However, for several reasons, early termination of fixed term employment contract by employer may happen.
This article focuses on the early termination of fixed-term employment contracts by employers in the UAE, as per the new Labour Law.
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Early termination of fixed term employment contract by employer in Dubai 2023.
According to Article 43 of the new Labour Law, fixed-term contracts may be terminated early for a legitimate reason as long as the required notice period, which must be in writing and at least 30 days but may not exceed 90 days, is given.
The party terminating the contract must provide the other party remuneration equivalent to the amount of the employee’s wage for the notice period if the employee refuses to serve the notice period or the employer does not want them to (or the remaining part thereof).
The law does not define a legitimate reason, leaving it open to interpretation by the Labour Courts.
Fixed Term Contract Under UAE New Labour Law.
The UAE’s new Labour Law, Federal Decree-Law No. 33 of 2021, allows employers to hire employees on fixed-term contracts for up to three years, which may be extended or renewed for a similar or lesser period.
Suppose the contract expires without being renewed or extended, and both parties continue to fulfil their responsibilities. In that case, the agreement is deemed renewed under the same terms and circumstances as the original agreement.
Fixed Term Contract UAE.
Under the new Labour Law, employment contracts with unlimited terms are no longer acceptable, while limited-term agreements are now restricted to three years.
Employers must convert their unlimited contractual agreements to restricted ones within a year of the Law’s enactment. Additionally, companies can choose not to renew the employee’s contract without incurring extra end-of-service fees.
Unfair Dismissal Fixed Term Contract.
If an employer terminates a fixed-term contract without a legitimate reason or providing the required notice period, it could be considered an unfair dismissal. The employee may be entitled to compensation and other benefits, per the Labour Law.
Al Mulla Labour Lawyer & Legal Consultant.
Al Mulla is one of the best labour lawyers in Dubai, with extensive experience in labour contract cases.
He can assist both employers and employees in understanding their legal rights and obligations under the new Labour Law. Employers can consult him to ensure their employment contracts comply with the new regulations.
At the same time, employees can seek his guidance in case of unfair dismissal or other employment-related issues.
FAQs about early termination of fixed term employment contract by employer.
Conclusion.
- The new Labour Law in the UAE aims to establish fair and balanced employment relationships and increase the flexibility and sustainability of the labour market.
- Employers can hire employees on fixed-term contracts for up to three years, which may be terminated early for a legitimate reason, with the required notice period.
- Employers must comply with the new or updated regulations to avoid legal complications.
- Al Mulla is the best labour lawyer in Dubai who can provide expert guidance and legal representation in labour contract cases.
Contact the office of Al Mulla via Whatsapp. Click here. Or visit us at our law firms: Dubai. You can also call us on phone: 00971501961291.
We recommend you read about the restrictive contract covenants and Dubai’s Employment contract renewal clause.
Also, learn about the Restraint period employment contract in Dubai and the Employment contract domestic workers UAE in Dubai 2023.
A legal consultant specializing in UAE labor law. He regularly publishes articles on the website and writes on various areas of UAE law, with a specific focus on labor law.