What is an Unlimited Contract-Employment Contract?

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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.

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 sponsorship. Still if you are working for for an employer, you are certainly entitled for gratuity under Unlimited Employment Contract.

31 Responses to “What is an Unlimited Contract-Employment Contract?”

  1. Aseef

    Nov 10. 2014


    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.


    Reply to this comment
    • Deepak Machado

      Nov 11. 2014

      Gratuity kicks in once you have completed 1 year of continuous service.

      Reply to this comment
  2. Kafayat

    Oct 25. 2014

    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

    Reply to this comment
  3. jojo

    Oct 18. 2014

    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?

    Reply to this comment
    • Deepak Machado

      Oct 19. 2014

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

      Reply to this comment
  4. FRR

    Sep 03. 2014

    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?

    Reply to this comment
  5. Mateen

    Jul 07. 2014

    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 ???

    Reply to this comment
  6. Nara

    Jul 01. 2014

    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.

    Reply to this comment
  7. sameer

    Jun 11. 2014

    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?

    Reply to this comment
    • Deepak Machado

      Jun 15. 2014

      Yes to avoid ban you need to complete atleast one year in the company

      Reply to this comment
  8. Virlourd Batucan

    May 22. 2014

    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…

    Reply to this comment
  9. lalayn

    May 12. 2014

    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?

    Reply to this comment
  10. shafeeque ahmed

    May 09. 2014

    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

    Reply to this comment
    • Deepak M

      May 11. 2014

      You need to check with your previous company

      Reply to this comment
      • Shahul

        May 11. 2014

        Plz reply to my query. The previous one of you answered now.

        Reply to this comment
      • bernard

        May 12. 2014

        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.

        Reply to this comment
  11. Shahul

    May 07. 2014

    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…

    Reply to this comment
    • Deepak Machado

      May 14. 2014

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

      Reply to this comment
  12. mary

    May 01. 2014

    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.

    Reply to this comment
    • Deepak M

      May 04. 2014

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

      Reply to this comment
  13. V B

    Apr 10. 2014

    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.

    Reply to this comment
    • Deepak M

      Apr 14. 2014

      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).

      Reply to this comment
  14. sisir subba

    Mar 07. 2014

    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

    Reply to this comment
    • Deepak M

      Mar 09. 2014

      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

      Reply to this comment
  15. Rk

    Dec 22. 2013

    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.

    Reply to this comment
    • Deepak M

      Jan 12. 2014

      If you are not receiving salary onn time you can address this issue to labour officer.
      If you resign now you may have the chances of getting an automatic labour ban

      Reply to this comment
  16. RL

    Nov 13. 2013

    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

    Reply to this comment
    • Deepak M

      Nov 14. 2013

      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!!

      Reply to this comment

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