Fixed Term Employment Agreement Template for the United Arab Emirates

A Fixed Term Employment Agreement is a legally binding contract that establishes the employment relationship between an employer and employee for a predetermined period in the United Arab Emirates. Under UAE Federal Decree-Law No. 33 of 2021, all employment contracts must be fixed-term with a maximum duration of three years, making this document essential for any business hiring employees in the UAE mainland.

When do you need this document?

You need a Fixed Term Employment Agreement whenever you hire an employee in the UAE, whether for a multinational corporation, local business, or startup. This applies to all employment relationships, from entry-level positions to senior executive roles. The document is particularly crucial when hiring foreign nationals who require work permits and employment residence visas, as immigration authorities require a valid employment contract. You also need this agreement when renewing existing employment relationships, as UAE law mandates that all indefinite contracts be converted to fixed-term agreements following the 2022 labor law reforms.

Key legal considerations

Several critical legal elements must be carefully addressed in your Fixed Term Employment Agreement. The probationary period cannot exceed six months, during which either party can terminate the contract with minimal notice. You must clearly define the employee's salary structure, including basic salary and allowances, as this affects end-of-service benefit calculations. The agreement must specify annual leave entitlements, which under UAE law is minimum 30 calendar days per year after completing one year of service. Termination clauses are particularly important, as premature termination without just cause can result in compensation obligations equivalent to the employee's salary for the remaining contract period or three months' salary, whichever is less. The contract must also address notice periods, which vary depending on the contract duration and whether termination occurs during or after the probationary period.

Legal requirements in United Arab Emirates

UAE law imposes strict requirements on Fixed Term Employment Agreements that you must follow to ensure enforceability. The contract duration cannot exceed three years, though it can be renewed for additional fixed terms. You must register the contract with the Ministry of Human Resources and Emiratisation and obtain necessary work permits for foreign employees. The agreement must be written in Arabic, or if in another language, must have an Arabic translation for official purposes. Under Cabinet Resolution No. 1 of 2022, you must specify working hours, which typically cannot exceed eight hours per day or 48 hours per week, with provisions for overtime compensation. The contract must detail end-of-service benefits calculations based on the employee's last drawn salary, with different formulas applying depending on the length of service. Additionally, you must include mandatory leave provisions covering annual leave, sick leave, and maternity leave as specified in the implementing regulations.