In 2023, significant revisions were introduced to employment contracts across the GCC, spearheaded by the UAE and KSA, with notable positive impacts on both employers and the workforce. Here’s a breakdown of the changes:
Employment Contracts & Laws: In the GCC, employment laws promote a balanced relationship between employers and employees, ensuring fair treatment and effective rights enforcement. These laws cover various aspects including working hours, overtime, leave, employee records, health and safety, minimum wage, termination, gratuity payments, and workplace injuries.
Changes to Employment Contracts: In the UAE, the concept of unlimited-term contracts was replaced with fixed-term contracts, initially limited to three years. However, recent amendments removed this cap, allowing flexibility for employers and employees to negotiate contract durations. Existing employees on unlimited contracts are required to transition to fixed-term contracts.
Authorities emphasize that contracts can be renewed upon mutual agreement.
Benefits of the Changes to UAE Employment Contracts: The new regulations aim to protect both employees and employers while fostering growth and stability in the labor market and enhancing GCC’s economic competitiveness. Flexibility is increased for both parties, reducing administrative burdens and offering opportunities for tailored contract terms.
Shorter contract terms allow for periodic reviews and updates, accommodating changes in roles and business needs, particularly concerning employee benefits, incentives, and non-compete clauses.
Women in the KSA Workplace: The revised employment laws also promote gender inclusion, aligning with KSA’s Vision 2030 to integrate more women into the workforce. Since 2020, approximately 51,000 Saudi women have joined the labor force, signaling positive shifts in societal perspectives and economic opportunities.
In the post-pandemic era, female workforce participation has provided a significant economic boost to the country.
In Summary: Most businesses have already transitioned to fixed-term contracts, a trend recommended for those who haven’t yet done so. Despite potential hesitations, the outlined benefits demonstrate the advantages of embracing shorter, more flexible contract arrangements.