What Is the Difference between Unlimited and Limited Contract in Uae
Jun 17, 2023 Uncategorized
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If you are looking for employment opportunities in the United Arab Emirates (UAE), you may come across two types of contracts – unlimited and limited. These contracts determine your employment status and the terms and conditions that govern your relationship with your employer. In this article, we will explore the differences between unlimited and limited contracts in the UAE.
Unlimited Contract
An unlimited contract is an employment agreement between an employer and an employee without any fixed term. As the name suggests, this type of contract has no limit on the duration of employment – it can continue indefinitely until the employee resigns or the employer terminates the contract.
Under the UAE Labor Law, an unlimited contract offers the most job security to employees. It provides numerous benefits, including the right to end-of-service gratuity, paid annual leave, and sick leave. Employees under an unlimited contract are entitled to these benefits regardless of their length of service with the company.
In case of termination, both the employer and the employee must give notice in accordance with the notice period stipulated in the contract or as per the law. For instance, if the contract states a notice period of one month, the employee must give one month`s notice to the employer before quitting, and the employer must do the same before ending the employment contract.
Limited Contract
A limited contract is a fixed-term employment agreement between an employer and an employee. Typically, this type of contract has a specific end-date, after which the employer is not obligated to renew it. The duration of a limited contract is specified in the contract itself and is typically for a period of one to three years.
Under the UAE Labor Law, a limited contract provides fewer benefits to employees than an unlimited contract. An employee under a limited contract is entitled to end-of-service gratuity only upon completing one year of service, whereas an employee under an unlimited contract is entitled to this benefit regardless of their length of service.
In case of termination, the employer is not required to provide notice to the employee if the termination occurs at the end of the contract term. However, termination of a limited contract before its expiration date can result in penalties for the employer.
Conclusion
Both unlimited and limited contracts have their own advantages and disadvantages. An unlimited contract provides more job security and benefits to employees, while a limited contract offers flexibility to employers. As an employee, it is important to carefully review and understand the terms and conditions of your employment contract before signing it. If you have any concerns or questions, seek legal advice to ensure that your rights are protected.
