The 2022 shift
Before February 2022, UAE private-sector employees could hold either limited (fixed-term) or unlimited contracts, with different termination rules.
Federal Decree-Law No. 33 of 2021 eliminated unlimited contracts effective February 2, 2022. All contracts must now be:
- Fixed-term, up to 3 years initially.
- Renewable for equal or shorter periods.
- Legacy unlimited contracts had a grace period until February 2, 2023 to be converted.
Practical impact
- Notice periods: 30–90 days, must be defined in the contract.
- Early termination without cause triggers compensation equal to 3 months' wages or the remainder of the term (whichever is less).
- Non-compete clauses limited to 2 years max and defined geography.