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, its differences from a limited contract, and what happens at the expiry date of a limited contract.
Office of Younis Mohammed Al Blooshi. Whatsapp: Click here. Location: Sobha Ivory 1 – Al Amal St – Business Bay – Dubai. Phone: 00971589984123.
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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.
Differences between limited and unlimited contracts.
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.
Another difference between the two types of contracts is that the calculation method for end-of-service compensation remains the same for both.
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.
What happens at the expiry date of a limited contract?
At the expiry date of a limited contract, if both parties continue to perform their obligations without renewing the contract, it will be considered renewed automatically for the same period and with the same terms and conditions.
However, if either party intends not to renew the contract, they must notify the other party with the intention of not renewing it.
The notice period should be the same as the notice period mentioned in the employment contract, which is a minimum of one month and a maximum of three months.
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 labour lawyer and legal consultant, such as Younis Mohammed Al Blooshi, to ensure compliance with the new labour law and to safeguard your rights as an employee or employer.
Contact the office of Younis Mohammed Al Blooshi via Whatsapp. Click here. Or visit us at our address: Sobha Ivory 1 – Al Amal St – Business Bay – Dubai. You can also call us on phone: 00971589984123.
Learn about the limited contract in UAE from labour lawyer Dubai and read about the consequences of not signing a contract of employment in Dubai. Get Expert employment contract legal advice in the UAE Dubai.
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.