If you’re wondering what is the limited contract in UAE and need to know more details, you have got your covered. This article is an inclusive guide about the limited contracts in the UAE.
If you’re considering a job opportunity under this agreement, you will discover comprehensive answers to your inquiries to easily make an informed decision.
- Limited Contract in UAE
- Difference Between Limited and Unlimited Contracts in UAE
- Content in Limited Contracts
- Rights and Obligations of Employees Under Limited Contracts in UAE
- Probation Period of Limited Contracts in UAE
- Limited Contracts Renewal in UAE
- Resignation
- Termination of Limited Contract
- Early Termination by any Party
- Notice Period for Limited Contracts in UAE
- End of Service Gratuity for a Limited Contract
- Gratuity Calculation for a Limited Contract
- Gratuity Calculation in Case of Resignation
- FAQ
1. What Is a Limited Contract in UAE?
A limited contract is a type of employment agreement in UAE that is valid for a specific period, which is no longer than 3 years.
However, it can be renewed for a similar or shorter period if both parties agree. Limited contracts are often used in the UAE for temporary or project-based work.
Here are some of the key benefits of limited contracts in the UAE:
2. What Is the Difference Between a Limited Contract and an Unlimited Contract in UAE?
The difference between limited and unlimited is regarding the employment contract duration, as their name suggests. They are two types of contracts according to MoHRE labour law.
Here is in more detail:
- Limited Contract: It has a specific end date that both parties agreed on. The limited-term contract in UAE is more used by employers who need applicants for time-based projects or tasks.
- Unlimited Contract: This type of contract gives greater flexibility as it doesn’t have a set end date and can only be terminated by mutual agreement between both parties.
However, there are certain circumstances where one party may terminate the contract without requiring the consent of the other party, which is subject to specific conditions.
3. What Should Be Included in a Limited Contract?
There is important information and points that should be clearly included in your limited employment contract in UAE to ensure your rights.
- The end date of your contract
- The start date of the contract
- The kind of work
- Workplace
- The salary amount
- The total duration.
4. What Are the Rights and Obligations of Employees Under Limited Contracts in UAE?
If you are considering a limited contract in the UAE, it is important to understand your rights and obligations under the law. You should also make sure that the contract is clear and unambiguous.
According to UAE Labour Law, find below all about your rights and obligations.
Rights
According to the UAE labour law, here is the list
- As per the resolution of the UAE Cabinet, as an employee, you’re entitled to take time off with full pay on public holidays (Article 28)
- In the event that work conditions necessitate you to work during public holidays, the employer must provide either
- Extra day off for each day worked or compensated the employee with their regular daily wage.
- An additional 50% of the employee’s basic wage for the days worked is an alternative form of compensation. (Article 28)
- You have the right to receive all payments, wages, and other entitlements outlined in the contract within 14 days following the end date of the contract term. (Article 53)
- You have the legal right to get fully paid annual leaves no less than the following. (Article 29)
- 30 days for each service year
- 2 days/month if the service duration is more than 6 months and less than 1 year.
- Any annual leaves left from the previous year.
- If you’re a woman, you should get maternity leave of a total of 60 days in the following breakdown.
- Full wage: first 45 days
- Half pay: remaining 15 days
- For expats, those who have worked continuously for a period of one year or more are entitled to receive end-of-service benefits in the UAE. (Article 51)
Obligations
- As an employee, you should stick to the normal working hours, which are 8 hours daily or 48 hours weekly. (Article 17)
- You have to do the work assigned to you by yourself and not outsource any external party. (Article 16).
- In case the work assigned to you gives you access to the employer’s clients or visibility on any of their work’s confidential information, you must not work on any competing project in the same sector for 2 years from the contract’s termination. (Article 10).
5. How Long Is the Probation Period for Employees with Limited Contracts in UAE?
According to the UAE Labour Laws, the probation period for employees with limited contracts in the UAE is 6 months maximum. This also applies to other contracts, not only the limited ones.
In addition, after completing the probation period and continuing working with the employer, the probation period will be considered part of the service duration.
By Employer
In the event that you wish to end the employment of the worker for any reason during the probationary period, you are required to provide written notice at least 14 days in advance.
By Employee
In this case, the employee should provide their current employer with written notice of at least one month (30 days).
Consequently, the new employer has to compensate the current employer for the employee’s recruitment cost. This is unless both parties agree otherwise.
6. Can The Limited Contract in UAE Be Renewed?
Yes, this is valid. The renewal of the limited contract in UAE is allowed after 3 years (max contract duration for the 1st agreement) in case both parties agree.
7. What Is the Criteria You Should Follow for Resignation with a Limited Contract in UAE?
Whenever you decide to resign from your job while having a limited contract, you should check if there is a notice period mentioned in the agreement.
This is because you have to stick to this notice period to avoid any legal disputes.
Moreover, it’s preferable that you give them a notice period of one month prior to the leaving time.
In addition, resigning before the end of the contract is considered an early termination, so you should check the regulations regarding termination as well.
8. How Can The Limited Contract in UAE Be Terminated?
The contract is terminated when one of the parties decides to end the agreement before its expiry.
9. What Happens If the Employee or the Employer Wants to Terminate the Limited Contract in UAE Early?
Either party may need to terminate the contract before its end date. However, there are some rules that you should follow according to the UAE Labour Law.
Employee
In case the worker wants to terminate the agreement early, they should pay “early termination compensation,” which is either
- An amount equal to half of three months’ remuneration: salary and allowance
- Half of the remuneration for the remaining period if it’s less than 3 months.
This is according to the rules regarding limited contact rule in UAE termination.
Employer
In case of the early termination of the limited contract in UAE by the employer, they have to
- Pay “early termination compensation” to the worker of a minimum 3 months’ payment: salary and allowances.
- Give them an amount equates to the contract’s remaining duration in case this period is less than 3 months.
10. How Long Is the Notice Period for Limited Contracts in UAE?
According to UAE Labour Law, limited contracts don’t have a notice period. However, in some cases, the contract might include a notice period but it should be with both parties’ agreement.
In addition, as an employee, it’s crucial to check every point included in the contract to be aware of all your rights and obligations.
11. What Is the End of Service Gratuity for a Limited Contract?
The end-of-service gratuity is a specific amount of money that the employer gives to the employee by the end of their working period. It’s considered a way of appreciation for their efforts.
Eligibility
Employees with limited contracts who spend 1 year or more are entitled to an end-of-service gratuity by the termination of their service.
12. How Is Gratuity Calculated in UAE for Limited Contracts?
The gratuity for limited contracts in UAE is calculated as follows
- More than 1 year and less than 5 years: 21 days of salary for each working year
- More than 5 years: a full gratuity of 30 days’ salary for each year following the first 5 years of service.
Moreover, the total gratuity amount shouldn’t be more than the wage of 2 years.
13. If the Employee Resigns, How Is the End of Service Gratuity Calculated?
In case you resigned before completing 5 years of service, you won’t be eligible for service gratuity. However, if you resign after 5 years, the gratuity is calculated the same as mentioned above.
FAQ
Yes, you can through the MoHRE’s website.
Yes, you can. According to UAE labour law, resignation for people with limited contracts is allowed as long as it’s agreed on with your employer and mentioned in the contract.
By understanding the advantages and limitations of limited contracts, you can make well-informed choices and find more opportunities for working in the UAE.
