Insights

Since Federal Decree-Law No. (33) of 2021(Employment Law) became effective in February 2022, employers were left to wonder when and how they should deal with Employment Agreements entered into prior to the introduction of the new Employment Law. In this article, we will answer some of the mostly sought after questions as regards to employer and employee queries.

Terms of Unlimited Term Contracts

The Employment Law grants employees a maximum period of one (1) year to adjust old employment contracts to be in line with the Employment Law. During this period, provisions of employment contracts entered into prior to the Employment Law shall remain effective as long as they are in favour of the employee. Hence, if there are conflicting provisions and the new Employment Law grants the employee more benefits, then such provisions will apply even if they are not expressly stated in the employment contract.

End of Service Benefits

Employers can use the provisions of the old or new law to calculate the End of Service Benefits if an employment contract is unlimited. However, Employers shall use the provisions of the new law to calculate End of Service Benefits of limited contracts regardless if they were entered into before or after the enactment of the law.

Termination of Unlimited Term Contracts

As per the new Employment Law, the following notice periods shall apply as regards to termination or resignation of employees:

After notifying the other party in writing for a period:

1. Not less than 30 days, if the service term is less than 5 years.
2. Not less than 60 days, if the service term is more than 5 years.
3. Not less than 90 days, if the service term is more than 10 years.

If one of the parties did not abide by the notice period, he shall pay to the other party compensation, even if no damage was caused, and the compensation shall be equal to the employee’s wage for the full notice period or the remaining part of it.

The Employment Law provides for several other exclusions and supplements to the old law, our team of experienced employment law lawyers are happy to assist you with your specific queries and provide you with tailored compliance structures which align with your company’s goals.