We posted an article on what is a Limited Employment Contract, so now let’s try to understand the other type which is an Unlimited Contract.
Simply put, an Unlimited labour contract is an employment agreement which does NOT have an expiration date.
An Unlimited term contract is more employee-friendly compared to the limited term contract because it is more flexible. These are used for long-term employees and seems more ‘permanent’. Both parties can cancel the contract so long as there is a mutual signed agreement and there is a notice of 30 days.
What is an Unlimited Employment Contract?
According the Ministry of Labour, the unlimited ones only specify joining dates, each follow respective provisions depending on the situation. The worker must inform the employer if he/she plans to resign and must complete the assigned notice period.
Based on our experience, Unlimited contracts are a much better option for employees as it is more open especially in terms of gratuity. Here’s a clause we have taken from the UAE Labour Law.
Gratuity in Unlimited Contract
ARTICLE (137) of FEDERAL LAW NO. (8) OF 1980
If an employee under a contract with unlimited period has left his work at his own option after a continuous service of not less than one year and not more than three years, he shall be entitled to one third of the end of service gratuity provided for in the previous Article.
If the period of his continued service is more than 3 years and less than 5 years he becomes entitled to 2/3 of the said gratuity, but if his continued service exceeds 5 years, he becomes entitled to the entire gratuity.
Don’t know what type of contract you hold? Here’s a guide how to check your Labour contract online.
REMINDER: Before signing you contract, please read it carefully and discuss it with your employer if you have questions/clarifications.
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
Helpful Articles Regarding UAE Labour:
- What is a Limited Contract?
- What is an Unlimited Contract?
- How to View Your UAE Labour Contract Online
- Difference Between Limited and Unlimited Contract
- Types of UAE Ban (Labour Ban-6 Months Ban, One Year Ban, Immigration Ban)