In a landmark vote that signals a significant shift in the labour market in Tunisia, the country’s parliament has adopted a sweeping new law that formally prohibits subcontracting for permanent roles and limits the use of fixed-term employment contracts. The legislation, passed after a marathon parliamentary session stretching from Tuesday morning into the early hours of Wednesday, aims to curb job insecurity and standardise employment contracts across sectors.

Adopted by 121 members of the Assembly of the Representatives of the People (ARP), with only four abstentions and no opposing votes, Law №16–2025 introduces a redefinition of lawful employment practices in Tunisia. The near-unanimous support for the bill, with only one amendment made to Article 8, suggests a rare moment of political consensus on an issue that has long divided labour advocates and business lobbies.

The law affirms the permanent contract — or contrat à durée indéterminée (CDI) — as the default form of employment in Tunisia. Fixed-term contracts (contrats à durée déterminée) will now be limited to exceptional, clearly defined circumstances: temporary surges in business activity, the replacement of an absent employee, or seasonal work. Probation periods are capped at six months, with a single possible renewal — a compromise that seeks to balance job security for employees with operational flexibility for businesses.

“This is a turning point in the fight against precarious work,” said a senior official from the Ministry of Social Affairs, speaking on condition of anonymity. “It ends a grey area that allowed long-term employment to be disguised under short-term or outsourced arrangements.”

Crackdown on Subcontracting

The second chapter of the law goes further, placing an outright ban on subcontracting for essential and permanent tasks within both private and public entities. The only exceptions permitted are for occasional or highly technical interventions — and only if such arrangements are not used to bypass core labour protections.

For years, the use of third-party contractors in Tunisia has been criticised for eroding workers’ rights and obscuring accountability. Critics argue that subcontracting was often used as a loophole to avoid offering full benefits or job security. The government now appears determined to close that door for good.

To ensure compliance, the legislation introduces a series of sanctions targeting companies that breach the new rules. These include financial penalties and — notably — the automatic recognition of a direct employment relationship between workers and the company benefiting from their labour. Firms found in violation may also be excluded from public tenders and stripped of tax or investment incentives.

Such clauses are likely to raise concerns within the private sector, particularly among multinational companies and fast-growing startups that rely on flexible staffing models. Industry associations have yet to issue formal responses.

Acknowledging the disruptive potential of these reforms, the law includes transitional provisions aimed at giving companies time to bring their practices into compliance. This phased approach is designed to avoid immediate disruptions to ongoing contracts and production cycles.

“This is not about punishing businesses but about formalising and stabilising employment relations,” a labour law expert at the University of Tunis explained. “The aim is to protect workers without strangling enterprise.”

A Broader Policy Shift?

While Tunisia has long struggled with high unemployment and a large informal economy, this legislative push reflects a broader regional — and possibly global — rethink of precarious work arrangements. Tunisia now joins a growing list of countries attempting to rein in the gig economy and put limits on contract work.

What remains to be seen is how the private sector will adapt to the new constraints, and whether the state has the institutional capacity to enforce the rules at scale. As the law comes into effect, Tunisia embarks on a high-stakes experiment to reset the power balance between employers and employees in the formal economy.

For now, one thing is clear: in Tunisia, subcontracting — at least for core, permanent roles — is no longer business as usual.