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.

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.


Deepak is a Credit and Risk professional, with interests in Technology, Business Quizzing, Reading, Writing, Table Tennis and Photography.

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

  1. 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
  2. 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
  3. 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
  4. 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
    RL.

    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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