What is the Limited and Unlimited contract in UAE

What is Limited and Unlimited contract in UAE

What is the Limited and Unlimited contract in UAE

There are two types of Labor contacts in UAE; Limited & Unlimited. You should know at the time when you are signing the job contract in which category you fall. Now the contracts are electronic, you can get them easily. You should have your contract with you to be aware of what information is in it about your job. Let’s see what Limited and Unlimited contract in UAE is;

Difference between Limited & Unlimited Contract

The main difference in limited and unlimited contracts is that the limited contract is subject to termination by any party. It could be employee or employer and the party who seems defaulted will be liable for the compensation. He needs to complete the remaining amount with a cap of 3 months of clearance charges. 

Whereas in the unlimited contract both employer and the employee can terminate the contract. By spending a sufficient notice period of one month as described in the contract. But there should be a valid reason for the resignation. 

Some points to know about the limited and unlimited contracts in UAE

Limited Contracts

  • In limited or fixed-term contracts the start and the end date is mentioned of the employment period. 
  • It will be canceled automatically upon it expires, and then you need to renew your contract.
  • This kind of contract is applied where the employer needs to engage his employees for a specific time and projects.
  • According to the latest reform in the UAE labor market; this limited contract is designed for a longer-term of 2-4 years. 
  • Article 120 of the UAE Labor states the contract may get dismissed, 

Few points to Remember

  1. if the employee submitted forged documents; the employer may dismiss the contract.
  2. the employee is appointed in probation period and dismissal happens during or at the end of the period.
  3. So, if he violates the instructions concerned with the safety and security of the official documents.
  4. however, if the employee couldn’t perform the job duties that’s been assigned to him. 
  5. he discloses any official secrets about the office and the work to the people who are outsiders.
  6. the employees found drunk or under the influence of any drug.
  7. if the employee stabs his colleagues, manager or employer.
  8. if the employee resigns himself for the reason other than registered in UAE’s Labor Law Article 121. He will pay his salary of 45 days or the remaining time of his contract, whatever is less. 

Related Article: Job opportunities in UAE

Unlimited contract

  • There is a start date in the unlimited contract but no end date.
  • The contract can be terminated by both parties but required 30 days of the notice period. The contract can be extended by mutual agreement.
  • The salary will be paid fully during the grace period served.
  • In case if no notice period was given, the payment of 30 days will compensate. They have to compensate for the one who couldn’t have the notice. 
  • The employer can terminate an employee’s contract anytime. It is stated in Article 120 if he violates any point. 
  • The employee can also terminate his contract. If the employer fails to fulfill the requirements he stated in the contract.

However, this piece of content is just for sharing knowledge. But it’s always best to contact your HR department, Ministry of Labor, or Freezone Authorities. One must ask about employment status. 


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