Tunisia's 2025 Labour Law Reform: What It Means for Startups

Tunisia's 2025 labour law reform made the open-ended contract the norm, limited fixed-term contracts to three cases and banned labour subcontracting. More than a year on, the law is changing how companies hire, and startups, which often relied on short contracts and outsourced developers, are among the most exposed. Here is what the law says and what it means for a young tech company.

What the 2025 labour law reform changed

The Assembly of the Representatives of the People adopted the text in May 2025 by 121 votes in favour, 4 abstentions and none against. It was published in the Official Journal (JORT No. 61) on 23 May 2025 as Law No. 2025-9 of 21 May 2025 on regulating employment contracts and prohibiting labour subcontracting. Some outlets, including Launch Base Africa, refer to it as "Law No. 16-2025"; the reference used by DLA Piper and the Tunisian press for the published law is 2025-9.

The new rules on contracts

The CDI becomes the default

Every employment contract is now presumed to be open-ended (contrat à durée indéterminée, CDI). A fixed-term contract (CDD) is allowed only for:

• a temporary increase in activity;
• replacing an absent employee;
• seasonal work.

A CDD signed outside these cases is automatically converted into a CDI, and the employee keeps all accrued seniority. According to WMC, this applies to contracts still running when the law took effect and to those terminated after 14 March 2025, provided there was no break of more than a year.

Probation is capped

Probation can last up to six months, renewable once, according to DLA Piper and Managers. Ending it requires 15 days' notice. After probation, any further contract with the same person must be a CDI, with no new trial period.

Labour subcontracting is banned

Supplying workers to another company for its regular activity (sous-traitance de main-d'œuvre) is now prohibited. A service contract remains lawful only if all three conditions are met:

1. the work requires specialised technical or professional skills;
2. it falls outside the client's main, permanent activity;
3. the provider's staff are not under the client's direction or control.

Workers supplied in breach of the ban are treated as permanent employees of the client company. The client is also jointly liable if a provider fails to pay wages or social contributions, and provider staff must get the same rights as the client's permanent employees.

Penalties and deadlines

• Illegal subcontracting: a TND 10,000 fine, doubled for legal entities; repeat offences can bring three to six months in prison.
• Irregular contracts: TND 100 to 300 per employee affected, capped at TND 10,000.
• Other consequences, according to Launch Base Africa: possible exclusion from public tenders and loss of tax or investment incentives.
• Compliance: employers had three months to regularise contracts and integrate subcontracted staff.
• Look-back: employees whose CDD ended between 6 March 2024 and the law's entry into force, after four years or more of service, are entitled to be reinstated. If the employer delays, they can claim two months' salary per year of seniority, within one year of the law's entry into force.

The first effects

The most visible consequence came from the staffing industry. In August 2025, Adecco announced it would leave Tunisia after 23 years, ending operations on 31 October 2025 and citing the new law, according to Launch Base Africa.

In February 2026, the Arab Institute of Business Leaders (IACE) published a survey of about 100 HR directors. Kapitalis and Tunisie Numérique reported that companies cite legal uncertainty around CDDs and subcontracting, higher costs and less flexibility, and that some have adjusted headcount. Cleaning and security services are the most exposed. The survey also calls for clearer rules on project-based contracts and on probation.

Why startups are exposed

Startups combine three features the law targets: uncertain cash flow, the need for flexibility, and frequent use of outside talent. In practice:

• Short contracts to "test" a role are no longer possible. A product launch or a new client may not count as a "temporary increase in activity", so check with counsel before using a CDD.
• Outsourced developers are a risk. For a fintech, software development and operations are generally the core activity. Putting a provider's developers under your own product manager, within your sprints, looks like the "direction and control" the law forbids.
• Genuine specialist services remain possible, such as a security audit or a legal review, when the provider delivers a defined result with its own staff and methods.
• Do not count on the Startup Label. None of the reports on the reform that we reviewed mention an exemption for labelled startups. See what the Startup Act offers.

Practical checklist for founders

• Audit every contract: list each CDD and check it against the three permitted cases.
• Review service agreements: who manages the provider's staff day to day, and is the work part of your core business?
• Budget for permanent hires: include social contributions and severance risk in your financial model and in fundraising discussions.
• Use probation well: set clear objectives and a review date before the end of each probation period.
• Document everything: job descriptions, reporting lines and deliverables help show that a service contract is genuine.

The reform adds to the pressures on Tunisian startups, which already face emigration of tech talent and a difficult funding climate. It also gives employees more security, which can help recruitment. Either way, founders need to plan hiring with these rules in mind.