What is an Unlimited Contract-Employment Contract?

Meaning of Unlimited Contract under UAE Labour Law

Unlimited contract means the contract has a commencement date but no end date. The contract can be terminated by mutual agreement with the consent of both the parties by giving the necessary notice period mentioned in the employment agreement.

The employee’s wages during the notice period shall paid in full for the entire notice period served.

An employer may dismiss a worker without notice as per Article 120 of UAE Federal Labour Law.

unlimited-labour-contract-uae

Rules of Unlimited Labour Contract:

  1. An unlimited contract has a start date, but no end date.
  2. 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.
  3. The employer must pay the salaries or wages of the employee up to the notice period.
  4. 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.
  5. 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.
  6. The employee also could terminate the contract as per Article 121 of UAE Labour Law, if the employer fails the obligations. 
  7. 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. 

Article 120 – UAE Labour Law – The employer may dismiss the employee without notice in the following cases:

  1. If the employee adopts a false identity or nationality or if he submits forged documents or certificates.
  2. If the employee is appointed under a probationary period and dismissal occurred during or at the end of said period.
  3. If he commits an error causing substantial material loss to the employer provided that the latter advises the labour department of the incident within 48 hours from having knowledge of the same.
  4. If the employee violates instructions concerning safety of the place of business provided that such instructions are displayed in writing at conspicuous places and in case of an illiterate employee the latter be informed verbally of the same.
  5. If he fails to perform his basic duties under the contract of employment and persists in violating them despite formal investigation with him in this respect and warning him of dismissal if the same is repeated.
  6. If he divulges any secrets of the establishment where he is employed.
  7. If he is awarded final judgement by the competent court in respect of an offence prejudicing honour, honesty or public morals.
  8. If during working hours he is found drunk or under the influence of drug.
  9. If in the course of his work he commits an assault on the employer, the manager or any of his colleagues.
  10. If he absents himself without lawful excuse for more that twenty intermittent.

The employee will be entitled to compensation if the termination of the contract had been for an unjustified cause. The court may award the employee damages, against the employer, provided that the damages so awarded does not exceed three months wages of the employee and the calculation to be based on the last wage paid to the employee.

The gratuity is applicable to all the employees whether you are under Company’s sponsorship or Father’s or Husband’s sponsorship. Still if you are working for an employer, you are certainly entitled for gratuity under Unlimited Employment Contract.

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Deepak is a passionate blogger with interests in bitcoin, online marketing, and writing.
  • Dear Deepak:

    Article 120, clause 3 talks about an employee causing “substantial material loss to the employer”. How is it determined and by whom as to how much of a loss is “substantial material loss”?

    Thank you
    RL.

    • Means any material loss directly occurred by an employee to the company or employer. It depends. Sorry I may not be able to answer this question since it is not clear to me too. ‘Substantial’ is a very subjective word!!

      • Hi, I’am under an unlimited contract, it’s been my second contract as I have already finished 2 years which is also unlimited. It’s basically my third year from the same company, I resigned and they will cancel my visa on November, 27 2014 and my temporary work permit on their sister company, do I have a ban of 6 months for that?

        Thank’s in advance!

  • Dear Deepak,
    I am on unlimited contract, as tax accounting clerk, and working for the company since sep-2013, totally irritated not satisfied with there accommodation, salary, working hours (there is a start time at 8 morning no end time sometime 9 at night depending on the owner’s will it could be 10 to 10:30) and friday also a half day only and no other holiday.
    I dont have a salary card even i dont know where is it goes and i just keep asking for salary like begging.
    i want to change my job is it possible? please be noted that i have a batter option.
    Please provided information that if i change,(What i have to do?) can i be slapped with 6 month ban? or what else.
    Will appreciate your help.

  • i am working for a company for least three year and if i don’t want to renew my contract ,company they are telling me that i will get ma gratuity 7 days per annum and and no air tickets also too go back home country any comment s plz let me know what i i can do

    • if you resign before 3 years you are entitled to 7 days gratuity per annum. Since it is a resignation you have to shoulder your air ticket expenses

  • Dear Deepak:

    I have been working for the company for eight years. My labour contract for five years has been an unlimited contract and the last renewal it was changed to limited contract expiring next month. However my new renewal contract is unlimited but the start date of the contract is dated to 2012. When asked I was told that’s how its on the system. Can you advice if this is correct.

    • It might have been changed during the change of contract terms unlimited to limited. Nothing to worry your gratuity should be calculated from the date of joining (the day you started to receive your salary).

  • i would like to know the procedure on changing visa. i worked 9 years on the previous company with unlimited contract and now i got an offer to a new company on which is freezone. please advise as my daughter is under my sponsorship as well.

    • You need to cancel your daughter visa first and when your new visa is stamped you can sponsor her again

  • Dear Deepak,
    I am working on unlimited contract. I just wants to know few queries.
    1.how many years should I work in this company to change the job without ban?
    2.After getting any offer from another company what is the procedure to relieve from the old one?

    Thanks in advance…

    • 1. you need to finish your visa to avoid ban
      2. you need to have cancellation from old company without having ban

  • i was working on unlimited contract march 2012 to mrrch 2014 at dubai base company
    and i ahve completed 2 year than i resign in that company and return to india. and i got one offer from unother company i accepted that offer when they went to apply for my visa they founfd that i m having 6 month ban .
    Please canyou clear this
    its urjent

      • sir,i, working for 6 years and 6 month in company.and company terminate me in my job..I would like to ask if theres a ban for me beca for use i searching job right .I wanna to sure so that i will not wasting my time for seaching job.If theres a ban twhat would be the ban to me.And how be it will be remove.

  • hi sir im lalayn im unlimited visa i want to transfer to another work but i finesh my 1 year already could it be posible ill be ban or no if i transfer?

  • Hello Mr.Deepak M.

    Please Help me. I’m working with my company for 1 yr and 5 months, and i’m with unlimited contract. I want to transfer to a new job. I was able to read an article that if you are under with UNLIMITED CONTRACT and if you work for more than a year continuously with your company, and you want to resign provided that you completed the 30 days notice period, you will not have a Labour Ban, plus i asked my Manger if they will impose a ban on me they said they won’t give me a company ban. My worries are How true it is that if i worked for more than 1 year, i won’t have an automatic 6 months ban…

  • I am going to join unlimited contract visa for new company.after the joining if i change to other company within six month or 1 year i have 6 month ban,write?

  • Hello.
    I have worked for a school 3 years. My contract was renewed this year and it is unlimited. On April many teachers were given two months notice about termination , we worked to the end of academic year and received gratuity ,but not everyone got compensation salary. I was told that is because my contract is unlimited. But it is stated in my contract papers that one month compensation salary must be paid. Considering that we all were fired for the same reason (not having bachelor in education) should only those with limited contract receive compensation salary?
    Best wishes.

  • Hi Deepak,

    I have limited contract and have completed two years with my current employer but unfortunately i could not find any other job as i want to change it. So please explain if renew my contract with them and after few month change my job will there be any ban ???

  • I am in unlimited contract (labour contract) and at the same time, with a three years contract (second agreement with the Co.) I was allowed to take my annual vacation but received a call from my manager on day of my arrival to my home country informing me that he will have to let go me due to reduction in force and will only have one month when returned from vacation. Please advise what are my legal right in this case and what compensations should I receive?

  • hello,
    i am local hire here in abu dhabi, my new company is unlimited visa,i am working for 2 months so yesterday i send a msg to my manager that i cant come to work because im not feeling well so shes send a message for me,she said dont bother me to come back to work until the further notice from HR decision on my status,i will be suspended until further notice; so what will be there punishment to me? if they are going to terminate me did i will having a Ban? or can i resign?

    • Jojo,
      Under probation, employees can be dismissed with a day’s notice.
      Get NOC, if they have terminated you.

  • Hi sir am working with limited company for 4 months now .we work for 12hours and the salary pay is too small 1000ad per month.I want to resign .plss I will like u to tell me if I resign we the company ban me or labour

  • Hi,

    I am currently working on unlimited contract with my employer, as my project work has been completed with client by 31-10-12, as i worked for 8 months for the company, will I be eligible for any benefits after cancellation of my visa and Will there be any ban as my employer himself cancelling the visa because of non availability of projects.

    Please reply as soon as possible.

    Thanks,

  • hi deepak,
    i am working as a safety officer i but my visa status is labour supervisor, unlimited visa,now we don’t have project and i spent only 8 months, so i have been terminated with termination letter,noc plus reason is mentioned that due to completion of major project we don’t have further requirement of labour supervisors.please guide me about 6 months ban how to lift.
    and i also got offer letter of new company.

  • Mr deepak
    if noc,termination letterand offer letter of new company is available.then what time we should apply to secure from ban on unlimited visa.
    i mean should we give above mention documents to p.r.o to submit with cancellation letter or wait for cancellation plus ban and then we should submit and wait for 1 week to check that ban is lifted or not.

  • Hi Mr. Deepak.

    Good day! I am in unlimited visa. been working in this company for 7 months already. I have decided to go home in my home country for good. I submitted a resignation letter with 30 days notice. I would like to ask do I need to pay for the visa expenses the company had for me? since they are asking me to pay for the Visa but its not written on the contract nor the offer letter. What could be the best action on this. I hope for a positive response. Thank you

      • what should i say to them since they ask me to pay? what will happen if the employer did not provide me my salary for this month after they know that i am resigning?

          • one last question. i have already submitted my resignation letter however they did not sign it yet. written on my resignation letter is the 30 days notice with the effective date. What if the employer refuse my resignation? what should i do? I really appreciate all your response.

            • You will have to come to agreement with your company.
              Companies can not refuse resignations.

          • Dear Mr. Deepak,
            I am planning to resign in my current job in a labor company and I might be hired by a freezone company. Do I need to inform my employer that I will be transferring to a new company because he might not cancel my visa if he knew about it just like what he did to one of our staff who wished to resign

          • They allow me now to resign however they informed me that they will not pay me on my 30 day notice. Help me with this please.

          • As what they told me they wont pay for my 30 days notice since i cant pay for the visa expenses they had for me. I am not so sure if which side is correct as far as i know based on the dubai labour employee is required to pay the employer on its 30 days notice, but i dont know how to defend myself to them. Mr. Deepak i really need your help for this. Thank you so much for all your response

      • Dear Mr. Deepak,

        I am planning to resign in my current job in a labor company and I might be hired by a freezone company. Do I need to inform my employer that I will be transferring to a new company because he might not cancel my visa if he knew about it just like what he did to one of our staff who wished to resign

        • Anne,
          Yes you will have to inform the current company that you will resign and serve the notice period as per contract.
          It is always better to do this. Employers can not force employees to stick to their companies.

          • But what if my employer will not process the cancellation of my visa? What shall I do from my end?

            • Anne,
              You will have to approach MOL in case the company does not support your situation.

  • hi im on unlimited contract and under probation already working for more than 4 months, if my employer terminate me should i have a labor ban? and if i resign should i have labor ban also? please answer..

  • i want to resign to my present job i’m already 1 year and one month here and i’m on Unlimited visa, do i have a ban for 6 months if i will not complete my two years? and base from the offer letter that i have sign before i need to pay all the visas expenses if i will not finish my contract, do i need to pay all the expenses though it is not on my contract?

  • Hi, My contract is Un limited and i completed 6 months and 10 days. If i resign now, will i have ban? i got offer more than 5000? pls comment on this,
    what can be done

  • Hi Deepak,

    Question, I am on an unlimited contract under and LLC company, and we have agreed to both parties to terminate my contract. What’s the procedure if we both agree in terminating the contract? am i required to still stay a month in the company. And will, i get a ban if the contract was terminated by both parties? If ever how can i lift my ban,? do i need NOC’s or what? HOPE YOU COULD HELP ME. THANK YOU!

  • Sir how can i know if the company is processing visa to me,since they did not give me offer letter and they are the who told me to exit and wait for my working visa,but im still waiting more than one month already?

  • i was from freezone visa for 2yrs and they transfer me into unlimited and now i already 1year in this unlimited in same companybasically i am already 3years in same company.if i want to resign do i have a ban for 6months?

  • Hi, I am on husband’s visa. I joined a company on January Month 2015. My probation period is 6 months. My job is target based and I have been best performer since Jan. I am getting opportunity from other Company. So if I resign in March Month so will I be banned?

  • Hello Mr Deepak, Please answer my question.
    I’m under Unlimited contract ,i been working for their company for one year this month, if i will resign to their company next month,can i get a ban or they can give me a ban or labour ban?

  • Mr. Deepak

    I am working in a multi-national company in Dubai. In my Dubai visa it’s written Manager but internally, my official designation in the company is Supervisor.

    When they revised the Visa (I was asked to sign an amendment contract in which I managed to have a photocopy).

    My question is, can I use the Manager title while applying for another job outside? My fear is that, the Employment Certificate my current employer will issue Supervisor not Manager. I am afraid that maybe the hiring company will question the reliability of my declaration.

    Can you help me please. Should I declare Manager or Supervisor?

    Regard

    Anonymous

    • Anonymous,
      You should mention the designation that the company provides you internally and not on visa.

  • Dear sir. I am vinod patil. I had been working since last tow year in ——————— as fireman. My contract period was tow year visa tetaus unlimited, I have been completed my contract period. But now company is saying you will not get the ticket you have to purchase by self, than what I do sir. kindly I need your help

    • Vinod,
      Provision of air ticket is company policy and not mentioned in Labour Law. It is a facility not a right!

  • Friend,

    I am under unlimited contract and I already want to resign. I have been working in the company for 6 months now. I am a Certified Public Accountant and my current position is Junior Accountant. I have better offers from other companies and I want to grab a better opportunity.

    Please help me. What action shall I consider and what are the consequences if I resign now.

    Thank you very much!

  • Mr. deepak, i just want to ask about my situation. Im under unlimited contract and will completed my one year this june. But in past few months me and my employer are always arguing and lots of misunderstandings. . then they have decided to terminate me,but the problem is they are forcing me to sign for a resignation which is i didn’t resign. If i will resign and sign the resignation letter should i have a ban? or what if they will provide me termination letter can i get ban?

    • Joshua,
      You should not be forced to resign! ban is automatic.
      Yes, termination may also get ban. But you could request MOL to waive that!

  • sir, I have completed two years as office boy under an Unlimited contract. now I want to change my employer.
    will I face for Ban or not, If NOT please tell me how.

    [email protected]

  • Good Day. base from i have read in the news paper if you ‘re under unlimited contract if you finish your continues service to the company you will not get any ban. is that true? Sir i will just ask an advice about this, because i’m under unlimited contract and i will complete my one year this june 23, and base from what i have read i need to give first my one month notice before leaving the company, i just want to know if it’s possible to give an advance notice period this coming may 23 and the effective day will be june 25 so that it will be exactly 1 year. what if they cancel it immediately while i’m on notice period?thanks. hope you can help me

  • Hi Mr. Deepak,

    I am working already for 1 month as Receptionist in my current company and had the unlimited contract signed yesterday. I need to know what will happen if I will resign since I have a better offer from the other company as Telemarketer. Will I face a labour ban since I am still on my probitionary period? Do I need to pay for the visa expenses even if it not mention in the contract?

    My employer asks for my Bachelor’s degree certificate to process my visa; will the applicable salary for my next job is AED 12,000 to be able to lift the ban? or will it depend if the offered salary is higher than the current salary as well as the job position?

    Thanks in advance!

    • Celle,
      Yes, you will face a labour ban as your contract is done. By contract do you mean labour contract?
      To avoid labour ban, you will need 12K salary with Bachelor’s degree in the new offer.

  • Sir I have completed 6 month in my recent company the name is Al dhafra restaurant now I got the chance to work in 5 star hotel as it is free zone. I resign from my company will I get banned and also I have graduation in same field tourism and hospitality management.

  • i am pharmacist in rak.with unlimited contract and completed one year now.is there any labour ban if the company want to cancell my visa.
    is there any labour ban if iam leaving the company

  • Hi Mr. Deepak,

    One of my cousin got job opportunity in one company. and he supposed to resign from his present company. he completed his 3 years visa ( means 2+ 1). so any ban will come on his visa(unlimited contract) if he resign from his job and want to join with new company?

  • Dear Mr. Deepak,

    I just wanted to know to be sure if I finish two years to unlimited contract, am i right to send a notice not to renew, if the company want me to continue am i have a right to refuse it?

    and i just wanted to know if i can get all my benefits like gratuity.

    Thank you.

  • Hello sir please am in an unlimited contract my six month is running now and I was not given any labour card by my company and am preparing to change my job my salary is 1000AED after given a month notice is there going to be ban or not.

    • Mustapha,
      From what you have explained, there seems to be a labour ban on you if you do not complete your contract.

  • Hi Mr. Deepak,

    I am under an unlimited contract and I have filed my resignation effective next month after 6 months of service to my current employer. I was hired by a recruitment agency in my home country and a lot of information wasn’t disclosed to me prior my departure to UAE.

    Upon arrival, I was left with no choice but to stay until I have saved enough money to resign. There were a lot of issues with the company e.g., I wasn’t informed that we have to work almost 14 hours daily, only one day off (I was informed a few days only before my departure), and most especially, my boss was making me uncomfortable – making unprofessional or sexual remarks, and such. For fear that my boss would make it difficult for me to resign and would make ways for me to make the final days of my employment a challenge, I told him I wanted to resign because I wanted to go back to my home country. Only after I told him this reason did he accept my resignation.

    Now, I would like to ask if ever he has the right to file an absconding case against me if I don’t go back to my home country (as opposed to what I told him). I will not disclose this information to him and will just let him think that I’m going back home so he will not bother me anymore (I will shoulder all my expenses including my ticket back home or exit to UAE if possible). I am also planning to ask for a quit claim agreement mentioning that I am free and cleared from all financial obligations with the company. After my current employer cancels my Visa, does he still have the right to meddle/interfere about my plans after my resignation and cancellation? Thank you in advance

    • Maria,
      Absconding case is filed only when the employer is unable to reach the employee or has lost contact.
      Once the visa and labour card are cancelled, the employer has no right to file any absconding case.

  • Hi. I just want to ask, i am working as a school nurse for 3 mos. Now and my probationary period is 6 mos. I signed for unlimited contract. If i resign, will i get ban? How can i lift the ban? Thanks.

  • Sir, im under limited contract and my company wanted me to sign to unlimted which is not so good to me because im going to finish my contract after 6 more months.

    Theres a lot of my coulleagues were terminated after they signed fron limited to unlimited,

    And theres a lot of my coulleagues also were forced to signed resignation letter,

    If i will not sign that resignation letter and if they will terminate me under limited or unlimited do i will get labour ban? And can i get NOC from the company?

    • Men,
      You have a choice not to sign the change in contract.
      It is better for you now to be on Limited Contract as the company will have to pay compensation if they terminate the contract.
      NOC will depend on the company.

  • Dear Deepak,,
    my contract is unlimited and company want to fire me with out any reason ??? so shall i eligible for 3 month salary in compensation or not???

      • Hi Deepak

        Many thanks for useful information, I have a question regarding my situation with my employer.

        I have been asked to resign from my position which occupied over 1 year in Dubai and over 2 years in Saudi Arabia, adding up to over 3 years in total with same company.

        I am offered 3 months compensation as my contract is unlimited but I am trying to negotiate a settlement for the car which I bought when I came over. The company paid 10% towards the deposit and paid monthly instalments for over a year now. I am reasonable to ask for the payment towards the car settlement as I have to pay the car off myself after termination if company does not offer any payment towards it. Car is bought on my name.

        I appreciate your response in this request.

        Regards

        Junaid

  • hi,

    i’m under unlimited contract, i finished the first contract which is 2 years last 2013. So my company renewed it for 3 years until 2016. if i want to resign now, am i going to have ban? thanks

  • Mr Deepak,
    hi sir I just want to ask for clarification about my situation, I already finished two years working in my company and signed an extension of my contract for another 1 year.if I will be hired by the new company will I have a 6 months ban?

  • Dear Deepak,

    I just want to inquire my visa is from Abudhabi freezone from masdar city. Started from Dec. 2015 till up to date. My question is what benefits i will get if my employer wants to cancel my visa. Dou the busuness are not being started or closure.

    Regards,
    William

  • Hello,
    I am working as a Civil Engineer, salary 8000/- per month
    My company given me notice of one month for termination of contract.
    I have completed 9 months in present job. Which compensation should I get? Also, can I join new company in UAE?

    Regards

  • Dear deepak ,
    I work in abudhabi .my contract is unlimited my salary is 6000.my designation is engineer . Is any ban is applicable if I quit my job with one year service ? How to avoid ban .?

    Thanking for your advices

  • Hi deepak hope you can help me please.
    I already sent my resignation to my employer last may 25 and end of my notice period is june 25. But till now im still working with them because we are waitung for my replacement and he will come this july 1 but the problem is amy employer told me that i still need to continue working while he didnt know yet all the files that i will be turn over. I already have an offer from other company that will be lifted my ban..i just mention in my resignation reasons for resigning is personal reasons necessitate..
    I told them that i will return to my home country but unexpectedly ifound a new job that offer me a higher salary double of my salary now. But my employer told me that i cant leave the pffice without his apprpval eventhough i already give noyice period. And he threaten me also that he will deport me to my home country and he will not cancel my visa unless i dont have ticket and he will block me also to UAE.. and if he found out that i work to other company they will file a case against me.. i am very afraud about it since they have a very close attorney here. . I am also afraid to have a complain because i dont want to make this up to the court coz i really feel stress.. what should i do?

    • Bertud,
      These are all classic pressure tactics used by companies!!
      You must first cancel your visa and exit the country and request your new company to apply for required approvals.
      Your old employer has no way of knowing your new status and he/she needn’t.
      If there is such complaint, you must approach MOL and file complaint against your company about such behaviour.

  • Hello sir,
    Can i ask some advice? i know you can help me. My noticed period already done this coming week since i already resigned last month. im under unlimited contract and finish my 1 1/2 year of continues service with them. Now they informed me that before leaving the company i need to compensate all the visa expenses and they will not give my passport unless they will accompany me going to airport. . and also they will file abscond against me.

    • Keren,
      This is not acceptable from company’s side.
      Visa costs are to be borne by company and not employee.
      You could file a complaint with MOL in this regard.
      Yes, they can choose to give your passport at airport.
      They can not file absconding without proper reason and you actually absconding.