All about limited contracts in the UAE
- About Limited Contract
- Unlimited and Limited Contracts
- Rights and Obligations
- Probation
- Breaking Limited Contract
- Gratuity
- FAQs
The Ministry of Human Resources and Emiratisation (MoHRE) issues limited employment contracts for those working in the private sector. How does the limited contract in the UAE work and what are the legal stipulations? Let’s find out.
LIMITED CONTRACT IN THE UAE
As the name suggests, a limited contract is a type of employment agreement that is valid for a specific time period. As per the law, these limited contracts should be no longer than 3 years, and can be renewed for a similar or shorter period if both parties agree.
Difference between limited and unlimited contract in the UAE
As per the Ministry of Human Resources and Emiratisation, there are two types of employment contracts with distinct differences. The option is between a limited and unlimited contract in the UAE. However, it’s important to note that both can be terminated by either parties prematurely under certain conditions:
Limited Contract
This type of contract is designed for time-based projects, specifying a mutually agreed-upon end date.
Unlimited Contract
This agreement doesn’t limit the employee to a set date. It can be terminated upon mutual agreement by both parties.
What should be included in Limited Contracts in the UAE?
These details must be clearly stated in a limited contract in the UAE:
- Start and end date of a contract
- Work type
- Salary amount
- Duration
RIGHTS AND OBLIGATIONS
Outlined below are some of the key rules and regulations specified in the Federal Decree-Law No. (33) of 2021 concerning the regulation of employment relationships and its amendments, as per the UAE labour law for limited contracts.
WORKER’S OBLIGATIONS
- According to Article 16 (1) of Federal Decree-Law No. (33) of 2021, the worker must perform the work themselves as per the contract and not outsource it to any other entity.
- As per Article 10 (1) of the UAE labour law, if the work assigned to the worker allows them to gain access to the employer’s clients or get knowledge about their work secrets, they must not work on any competing project in the same sector for two years, after the termination of the contract.
- According to Article 17 (1) of Federal Decree-Law No. (33) of 2021, the employee must work under the “normal working hours”, which are eight hours per day or 48 hours per week.
WORKER’S RIGHTS
- Article 28 (1) of the UAE labour law states that the worker is entitled to get an off with full pay on public holidays, defined by the resolution of the UAE Cabinet.
- According to Article 28 (2) of the UAE labour law, if the work conditions require the employee to work during public holidays, the employer will give them:
- Another day off for each day or pay them the wage as per the normal working day
- An extra 50% of the basic wage for that day.
- According to Article 53 of the UAE labour law, the employee is entitled to receive payments, wages and other entitlements stipulated in the contract within 14 days “from the end date of the contract term”.
- As per Article 29 (1) of Federal Decree-Law No. (33) of 2021, the employee has a legal right to get an annual leave with full pay, of not less than;
- 30 days for each year of service
- 2 days per month if the service term is over six months and less than a year.
- Annual leaves due from the last year
- As per Article 30 (1) of the UAE labour law, female employees must get maternity leave of 60 days in the following manner:
- The first 45 days with full wage
- The remaining 15 days with half pay
- Concerning the full-time foreign workers, Article 51(2) of Federal Decree-Law No. (33) of 2021 states that those employees who have completed a year or more in “continuous service” are eligible for end-of-service benefits in the UAE.
UPON THE EXPIRY OF THE CONTRACT
- As per Article 13 (11) of the UAE labour law, the employer is obliged to give a certificate of experience to the worker without any charges, upon the expiry of the employment contract. The certificate must include:
- Date of employment
- End-date of contract
- Job title
- Type of work
- Last wage the employee received
- Reason for the termination of the contract
The certificate must not include anything that could jeopardise a worker’s chances of finding a new job.
- Article 43 (2) of the UAE labour law states a few important requisites about the applicability of employment contract within the purview of the notice period:
- The employment contract remains valid throughout the notice period. Hence, the worker is entitled to a full wage for that period.
- The employee must also work during this time frame if the employer requests so.
- Exemption or reduction of the notice period is allowed only if both parties mutually agree and the rights of the workers are not compromised.
- Regarding non-compliance with serving the notice period, Article 43 (3) of the UAE labour law states that the breaching party will pay the non-breaching party compensation, which is also known as the “notice period allowance.”
- They must compensate the non-breaching party even if their absence hasn’t caused any damage to them.
- The compensation must be equal to the worker’s wage for the full notice period or the remaining part, varying on a case-to-case basis.
- According to Article 43 (5), if the employer terminates the contract, the worker will have a right “to be absent during the notice period for one working day without pay per week, in order to search for another job”.
- This clause is only applicable if the worker notifies the employer three days prior to their absence.
- Article 35 of the UAE labour law explains the validity of the notice period, in case of termination during the leave:
- If either party wants to end the contract as per the stipulations of the law while the worker is on leave, the notice period (agreed upon in the contract) will begin only from the day the worker returns from the leave.
- This law is subject to the mutual agreement of the parties.
Probation
As per UAE Labour Laws, employees with limited contracts get a probationary period of a maximum of six months. It will be part of the service’s duration.
In the case of employees
- It is recommended that they provide employers a written notice of at least one month or 30 days in case they switch jobs.
- If they have to resign before the probation is over, a 14-day written notice is required in advance.
In the case of employers
- Employers who wish to terminate an employment before the probationary period is over are required to provide written notice at least 14 days in advance.
Breaking limited contract in the UAE
The case varies for employees and employers:
In case of Employee
Workers who want to end their contracts early are required to pay “early termination compensation”. This can be in the form of:
- Half of the payment for the remainder of the period (provided it’s less than three months)
- Amount equal to half of three month’s remuneration
In case of Employer
An employers who wishes to terminate a limited contract in the UAE early are required to:
- Pay terminated employees an amount equal to remaining duration in case said duration is less than three months
- Pay “early termination compensation” for the remaining period if it is less than three months.
LIMITED CONTRACT GRATUITY
The gratuity for limited contracts in the UAE is calculated based on the number of days of employment:
- More than five years: Full gratuity of 30 days worth of salary for each year following the first five.
- Less than five and more than one year: 21 days worth of salary for each working year.
FAQs
How is gratuity calculated if an employee resigns prematurely?
If employees, who are required to complete at least five years of service, resign before this time, they are not entitled to an end of service gratuity. In this case, the gratuity will be the same as in the case of an unlimited contract.
WHAT IS THE RULING FOR LIMITED CONTRACT IN THE UAE FOR 2024?
Yes, you can resign if it has been previously agreed upon by your employer in writing. Make sure to serve the notice period and abide by the legal stipulations stated above. Here is how you can resign from your job in the UAE.
CAN YOU CHECK YOUR LABOUR CARD ONLINE IN THE UAE?
Yes, you can log into the MOHRE website and follow this procedure to learn how to check your labour card online.
That brings an end to our guide on limited contracts in the UAE. The labour processes are well defined in the country, courtesy of MOHRE and its online system, Tasheel.
If you face any problem in terms of your employment contract or the conduct of your employer, you have the right for MoHRE file complaint.
MOHRE strives hard to empower both employees and employers in the UAE. The Ministry has recently launched an unemployment scheme in the UAE to offer financial support to employees who have lost their jobs in the last few years.
For more insights about the UAE job market, stay tuned to MyBayut.
