An unlimited labour contract is an employment agreement which does NOT have an expiration date. Both the employer and the employee can terminate the contract given with the consent of both ends by providing necessary notice period based on the agreement.
An Unlimited term contract is more friendly to the employees compared to limited term contracts as it is more flexible. These are used for long-term employees and seems more ‘permanent’.
What is an Unlimited Contract in UAE Labour Law?
These are the important things to remember about an Unlimited Labour Contract:
- An unlimited contract has a start date, but no end date.
- The Employee or the employer may end or terminate the employment contract by giving a notice period of 30 days. It is also possible to extend the notice period if both parties mutually agree to extend the notice period.
- The employer must pay the salaries or wages of the employee up to the notice period.
- If for any reason, the notice period was not served, the party which did not adhere to this condition must compensate the other party for the 30 day wages/salary.
- If an employee has violated any conditions under Article 120 of the UAE Labour Law, then the employer could terminate the employee with immediate effect.
- The employee also could terminate the contract as per Article 121 of UAE Labour Law, if the employer fails the obligations.
There must however be proper justification from employer’s side for terminating employee; for arbitrary dismissals and terminations, the employer will be liable to pay 3 months’ compensation to the employee.
If the employee completed to serve the notice period, He or She is entitled to receive a full 1 month salary. The employee is also entitled to receive compensation if the contract has been terminated for no justified reason. Remember that the court may award employee damages against the company given that the compensation doesn’t exceed 3 months of salary based on calculated employee’s wages.
The employee is entitled to receive end of service benefits or gratuity whether you are under Employment, Father or Husband sponsorship. In another sense, the Unlimited term is much better compared to the Limited term due to its flexibility.
Don’t know what type of contract you hold? Here’s a guide how to check your Labour contract online.
Note: Information posted above is only a guide. It is good to seek legal counsel or contact the UAE Ministry of Labour for inquiries regarding your specific case. For a full coverage of the UAE Labour Law, it is best to visit the Ministry of Labour website and read the document. You can check it out here – UAE Labour Law