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.

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.