What is a limited and unlimited contract?

Limited Contract:

 A Limited contract has a start date as well as an end date

A limited contract can’t exceed 2 years’ term and it should mention the notice period varying from a minimum of 1 month to a maximum of 3 months.

Or the party can individually terminate the original contract or a renewed contract given He obeys with the legal results of early termination which include:

• Notifying in written minimum 1 month in advance but no longer than 3 months
• Respecting the contract agreement for the duration of the notification
• Repaying the other party to the level that was agreed to by both the parties, given this doesn’t exceed the similar of 3 month’s gross wages.

A limited contract can be terminated on the accompanying bases:

• If the term of the contract expires and isn’t renewed.
• If both, the employee as well as the employer mutually agree to end it.
• If a worker has committed any of the violations as referenced under Article 120 of the Labour Law.

Unlimited Contract:

 An Unlimited contract has a start date, however there is no end date

In the event of unlimited contracts, an employment relation is terminated in one of the accompanying instances:

• Both, the employee and employer mutually agree to end the contract.
• When either party plans, whenever, to end the contract given that the ending party accepts with the legal notification requirements and continues to respect his obligations for the duration of the notification period, which can’t be less than 1month and no longer than 3 months.
• When either party acts singularly to end the contract, without following the lawful notification and without reasons of default by the other party – in such a case, the terminating party bears the lawful results of early termination.

Termination without notice:

An employment contract, regardless of whether limited or unlimited, can be ended without notice period by either party following the United Arab Emirates Labor Law

End of a contract without notice by the employer.

An employer can end an employment contract without notice as well as deprive the employee of his end of service gratuity if the latter:

If the individual is over the age of 70 years. Get social welfare or have additional requirements:

• Adopts a wrong identity or nationality or if he/she submits forged certificates or documents.
• Is appointed under a probation period and dismissal happened during or at the end of said period
• Commits an error making a substantial material loss to the employer given that the latter informs the labor department of the incident inside 48 hours from having knowledge of the same.
• Disobeys instructions concerning safety of the places of business given that such guidelines are displayed in writing at obvious places or verbally informing to an uneducated worker
• If he/she fails to perform his/her fundamental duties under the employment contract and continues disobeying them despite formal investigation with him/her in this respect as well as warning him/her of rejection if the same is repeated
• Divulges any secrets of the foundation where he/she is employed
• Is granted final judgment by the competent court concerning an offense prejudicing honor, genuineness or public morals.
• During working hours, he/she is found drunk or under the influence of prohibited drugs.
• In the course of his/her work, he/she commits an attack on the employer, any of the colleagues or the manager.
• Absents himself/herself without lawful reason for over 20 discontinuous days or over 7 successive days during one year.

Termination of contract without notice by the employee:

 An employee can end an employment contract without a notice period if:

• The employer has not been successful to meet contractual or legal responsibilities towards the laborer (for instance, if he fails to pay salary for a period exceeding 2 months which is 60 days)
• The employee has filed a complaint in the court against an employer who has failed to secure employment of the worker (for instance, in case of a business shutdown or if the business has not been active for a period exceeding 2 months which is 60 days)
• The final ruling for a labor complaint mentioned to the labor court by MoHRE (Ministry of Human Resources & Emiratisation) is in favor of the worker.

MSZ corporate services provider also assist in business setup and product registration. Its best if you know the difference between limited and unlimited contract. For more information on limited and unlimited contract, Click Here to Contact MSZ or Email to info@msz.ae. we will be glad to assist you.