What is an Unlimited Labour Contract?

Unlimited Contract – Employment

As mentioned in my previous post about Limited Labour Contract, there are 2 types of labour contracts under Ministry of Labour UAE.

1. Limited Contract

2. Unlimited Contract

What is Unlimited Contract?

An Unlimited Contract is one which is open ended. The contract itself has an expiry. However, it is automatically renewed at the end of its tenure unless the employee resigns or is terminated.

Why do companies use Unlimited Contract?

Unlimited Labour Contracts are more in use in UAE due to their flexibility and user friendliness. It is kind of comforting to employees that their employment contracts do not have an expiry and will be renewed at the end of the contract period. This does not mean that the employees can not be terminated and resign under Unlimited Contracts. It can happen. 

When can an Unlimited Contract be terminated by Employer?

Unlimited Contract can be terminated for following reasons:

A – Lack of desired performance on part of employees. In such cases, companies can provide 30 day notice to the employee.

B – Gross Misconduct by employee. As mentioned in Article 88 of UAE Labour Law and as per Article 120 of UAE Labor Law, an employee can be dismissed by employee citing valid reasons.

Can an employee end Unlimited Contract?

Any employee may resign from their job provided they adhere to the notice period rules. Note that employees may also face labour ban incase the contracts have not been completed. 

However, there are ways in which you will be able to avoid facing 6 month labour ban.

How is gratuity calculated if an employee resigns?

In case of Termination: Calculate End of Service Benefits

In case of Resignation: Calculate End of Service Benefits