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Changing Employment Contracts in the GCC

Employment Contracts

What do these changes to employment contracts mean for GCC employers and your workforces?

As far as employment contracts in the GCC are concerned, significant changes have been made all over the region in 2023. The UAE and KSA are leading these changes, and they have definitely had a positive impact on both employers as well as the workforce. Here’s how

Employment Contracts & Laws

The first fact to know is that the employment laws in the GCC encourage a healthy and balanced employee-employer relationship. These contracts and laws enable both the employers and the employees to obtain their rights in a fair and effective manner. Employment contracts and law cover matters related to:

  • working hours
  • overtime
  • leave, vacation and public holidays
  • employee records
  • health and safety standards
  • minimum wage
  • termination of employment
  • end of service gratuity payments
  • injuries at work
  • and many others

One of the aspects that employment contracts and law covers is “unlimited-term” contracts.

Changes to Employment Contracts

In the UAE, new laws eliminate the idea of unlimited-term contracts and allows only fixed-term contracts (with a maximum duration of three years) to be issued. However, that requirement has been amended to remove the cap and allow employers and their employees to agree between them what the length of the limited term will be. Businesses are required to change all current employees, who are on unlimited duration contracts, to fixed-term contracts.

The authorities who make the employment laws are of the view that employment contracts can be renewed as long as both parties agree to the conditions.

Benefits of the changes to UAE Employment Contracts

The new rules and regulations aim to offer protection to employees and their employers in a balanced way. These new employment contracts will also advance the labor market’s growth – and stability – while hopefully enhancing the economic competitiveness of the GCC.

These changes also provide employers and employees with more flexibility and minimise the administration of contracts for talented employees who employers want to retain long term. Employers and employees can now agree on the length of their contract, finding the best middle-ground for all involved.

There are also advantages to a shorter contract term, such as the opportunity to review and update terms of employment at regular intervals. This can reflect changes in the employee’s role and developments in the employer’s business, especially in the relation to employee benefits, incentive arrangements, and non-compete restrictions.

Women in the KSA workplace

The new GCC employment laws also encourage women to bring women into the workforce. As per KSA’s Vision 2030, more than one million women will enter the workforce by 2030.

Research shows that almost 51,000 Saudi women have joined the labour market since the year 2020. This is very encouraging that perspectives are changing and also for better prospects.

In a post pandemic era, the changes to and the inclusion of women in the workforce has given a much needed economic boost to the country.

In summary

Most business have already transitioned to fixed-term employment contracts, but if you haven’t, you definitely should. As seen above, there are definitely benefits, even if your instinct as an employer is to keep contracts as long as possible.

If you need any advice on these matters, or need HR consultancy of any kind, give Oakwood a call today.

Saima Arfeen

Saima Arfeen

Saima is Oakwood's Associate Consultant and works in our Associate Team

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Changing Employment Contracts in the GCC

What do these changes to employment contracts mean for GCC employers and your workforces?

Employment Contracts
Saima Arfeen

Saima Arfeen

Saima is Oakwood's Associate Consultant and works in our Associate Team

Share this post

Facebook
Twitter
LinkedIn
Email

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