Limited v Unlimited Contract

Dubai Law Regarding Employment Contracts

UAE’s federal labour law, Federal Law No. 8 of 1980,

and its amendments (UAE Labour Law)

Part I – limited contracts

Though Dubai lawyers may be familiar with UAE Labour Law, many residents and companiesremain confused until they are required to defend their rights in court. One basic premise of UAE Labour Law we must all understand is the difference between a limited contract and an unlimited contract. In the article below we will look at the key points of a limited contract.

What is a limited contract?

A limited contract for employment has both a start date and an expiry date.  The term of employment may range from one year to a maximum of four years.  Upon expiration of the limited contract, the employer and employee may agree to renew the contract for an equal or lesser term or allow the contract to expire.  (UAE Labour Law, Articles 36 & 38)

Under a limited contract, an employer may not terminate employment prior to the expiration date without penalty unless the employee has committed a violation under Article 120 of the UAE Labour Law and the employer has followed all required procedures.  Similarly, an employee may not terminate the contract prior to expiry without penalty unless the employer has committed a violation under Article 121 and the employee has followed all reporting requirements.  Additionally, the employer and employee may mutually agree to terminate a limited contract, so long as the employee provides written consent. (UAE Labour Law, Articles 113, 115 & 116)

Remember, a limited contract is limited in that it exists for a fixed period of time.

Hiring a law firm with qualified local advocates in Dubai who are familiar with Dubai law and UAE Labour Law can prevent costly mistakes. Contact [INSERT CONTACT DETAILS] for more legal advice.

Part II – Unlimited Contracts

As mentioned in our last article, whilst Dubai lawyers might be familiar with UAE Labour Law, many residents and companies remain confused until they must defend their rights in court. A basic premise of UAE Labour Law we must all understand is the difference between a limited contract and an unlimited contract. In the article below we will look at the key points of an unlimited contract.

What is an unlimited contract?

An unlimited contract for employment has a start date, but does not have a set duration or expiry date.  A limited contract may become an unlimited contract if both the employer and employee continue the employment relationship after a limited contract has expired, but do not execute a new written agreement.  Also, any unwritten employment contract is considered unlimited.  (UAE Labour Law, Articles 39 & 40)

For an unlimited contract, either party may terminate employment by providing at least thirty days notice; however, the reason for termination must be valid and work-related to avoid possible penalties.  (UAE Labour Law Articles 113 & 117)

So, an unlimited contract does not end unless either the employee or the employer gives notice.

Remember that hiring a law firm with qualified local advocates in Dubai who are familiar with Dubai law and UAE Labour Law can prevent costly mistakes. Contact [INSERT CONTACT DETAILS] for more legal advice.

Part III – Both Limited and Unlimited

In Part I and Part II, we discussed limited and unlimited contracts individually. Although many Dubai lawyers are familiar with UAE Labour Law, residents and companies can be unsure of their rights until they are forced to defend those rights in court. Though fundamental differences exist between a limited contract and an unlimited contract, there are important core similarities.

What information is required for both limited and unlimited contracts?

No matter the type of contract, UAE Labour Law requires all employment contracts to contain certain information. Both limited and unlimited contracts must contain the following:

  • The date employment began
  • The type and place of work
  • The contract duration (if it is a limited contract)
  • The wage amount
  • The applicable probation period (from zero days to six months)
  • The applicable notice period (at least 30 days but no more than three months)
  • The amount of annual leave (at least 30 calendar days)

(UAE Labour Law, Articles 36, 37& 118)

Without this information, the Ministry of Human Resources and Emiritisation or the Free Zone Authorities whether limited or unlimited, will not accept a contract.

For further information from qualified local advocates in Dubai who are familiar with Dubai law and UAE Labour Law, contact us.

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