What is unlimited contract in UAE labour law?
The UAE has recently undergone a significant change in its labour law, removing the unlimited employment contract from the Federal Labor Law No. 33 in 2021. The new law now stipulates only a limited employment contract.
This article provides information on what an unlimited contract is in the UAE labour law, and its differences from a limited contract.
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Table of Contents
What is unlimited contract in UAE labour law?
An unlimited contract is an employment contract in which the employer and employee have not agreed on a specific period for the duration of the employment.
Under the previous UAE labour law, an unlimited contract was the default employment contract unless the parties agreed otherwise.
However, after implementing the new Federal Labor Law No. 33 in 2021, the unlimited employment contract has been removed, and only a limited employment contract is now allowed.
Limited contract and unlimited contract.
The main difference between limited and unlimited contracts is that a limited contract has a specified duration, whereas an unlimited contract does not.
In an unlimited contract, either party can terminate the employment relationship by giving notice.
However, in a limited contract, neither party can terminate the employment relationship before the end of the specified period without a valid reason.
Unlimited contract gratuity.
The calculation method for end-of-service compensation remains the same for both types of contracts.
The end-of-service compensation is calculated based on the total years of service.
And it is still the same – 21 days of the basic salary for each year of the first five years of service and 30 days of the basic salary for each year after the five years.
The total compensation should not exceed the value of two years of the total salary.
FAQs about what is unlimited contract in UAE labour law.
Conclusion.
In conclusion, the UAE labour law has undergone significant changes by removing the unlimited employment contract and stipulating only a limited employment contract.
The main differences between the two types of contracts are the specified duration and the termination notice period.
It is essential to seek legal advice from a legal consultant, such as our labor lawyer in Dubai, to ensure compliance with the new labour law and to safeguard your rights as an employee or employer.
Contact our labor law firm in UAE for expert help. Click the Whatsapp icon below.
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A legal consultant specializing in UAE labor law. He regularly publishes articles on the website and writes on various areas of UAE law, with a specific focus on labor law.
