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The difference between limited and unlimited contracts in Dubai

The difference between limited and unlimited contracts in Dubai

 In Dubai, limited contracts and unlimited contracts are available. Before moving on to the difference between limited and unlimited contracts in Dubai. We must understand what a contract in UAE is? Contract Law in Dubai, What is the Labour Law in UAE, Abu Dhabi, Sharjah, and the other UAE cities. The principal contract function is to agree between two or more individuals or parties over a specified subject area official.

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The contract is a legally binding instrument that establishes and controls the rights and responsibilities of the contracting parties. If the agreement satisfies the legal criteria and is approved by the court, it is legally enforceable. It is now coming to the types of contracts in Dubai.

Those two types are limited contracts and unlimited contracts in Dubai.

What is a Limited Contract?

A type of contract that is in fixed terms and is usually tied to the length of time that the UAE resident visa is valid is a Dubai limited contract. It is a time-limited contract with a start and end date. In Dubai, the terms of a limited-term contract are related to the employees’ visa. The visa validity is two to three years, depending on the employer’s location.

A Dubai Limited contract includes starting and ending dates of the contract. It consists of the designation, salary or remuneration, and the employee’s workspace. The last thing it also contains the work-frame.

The limited contract has an end date and a starting date. Any party can terminate the contract if an employee is dismissed during their probationary term. The company can do it at their own choice and not pay them anything. Or if a person resigns or quits from their position during their probationary term. They are not required to pay anything to the employer. In one more situation, unless either party terminates the Dubai limited contract early or both parties renew it, it will automatically terminate at the end of the term.

Dubai Limited-term contracts are good and effective when a business or an organization has to hire employees for specific projects whose duration is known ahead of time. A limited-term contract in Dubai is renewable with the approval of both parties. This contract can be renewed or extended with the consent of both parties. With the agreement of both parties, a limited contract is extendable as an Unlimited-term contract in Dubai at the end of time.

What is an Unlimited Contract?

An unlimited contract is a type of contract that is open-ended, more flexible, and generally used in the UAE. It can be terminated by mutual consent or by delivering a 1 to 3 month warning period. All parties have to fulfil their duties during this period.

The term “unlimited contract” refers to a contract with a starting date with no expiration or end date. The contract can be dissolved (ended) by mutual consent with both parties’ approval by providing the required notice time specified in the employment agreement.

An unlimited term contract is the employees’ favourite in Dubai as it is versatile. Employers use these contracts in long-term employment or permanent employment. Both parties have the right to cancel the contract if there is a mutually written agreement and a warning period of 30-days.

By delivering 30 days, either the employee or the employer can cease or terminate the employment contract. It is also possible to prolong the notice time if both parties agree. During the notice period, the employee’s salary must be paid in full for the whole notice period.

According to 120 Articles of the UAE Federal Labour Law, an employer may fire a worker without cause.

What is the difference between limited and unlimited contracts in Dubai?

The difference between limited and unlimited contracts in Dubai is that an unlimited contract is friendly and flexible to employees. In contrast, the limited contract bounds the employee with a single employer.

According to the new amendments for the limited contract in Dubai,

You’ve been with the firm for two years. If you quit before the contract expires, you will face a 6-month automatic Labour prohibition. In addition, your employer has the authority to ban you for more than six months. Within the terms of your contract, you are not permitted to transfer to another company.

Unlimited contacts in Dubai are flexible and more user-friendly than limited contracts in Dubai. As a result, an unlimited duration contract is more frequent than a limited contract. It can be used for staff hired on a long-term basis and are not to work on a project. On the other end, Limited-term contracts are effective when a business has to hire personnel for specific projects whose duration is known ahead of time.

So this is the difference between a limited contract and an unlimited contract. The description of the Limited contract and Unlimited Contract in Dubai elaborates on the difference between limited and unlimited contracts in Dubai.

How to check limited and unlimited contracts?

The following checklists of individual contracts can check the difference between a limited contract and an unlimited contract in Dubai. As mentioned by the UAE, an unlimited contract of employment must have at least the following:

  • The termination date of the contract
  • Starting date of the work
  • Type of the work
  • Workplace
  • Amount of the payment

Whereas compared to the Dubai unlimited contract, according to UAE Labor Law, the Dubai limited contract includes the following:

  • The termination date of the contract
  • Starting date of the work
  • Type of the work
  • Workplace
  • Amount of the payment
  • Work time (duration)

Limited and Unlimited contract resignation UAE 2022

The resignation of the Limited and Unlimited contract in UAE 2022 is elaborated as follows:

Limited-term contracts often have no notice provision and end at the expiration of the term or on the time mentioned in the contract (or if either party terminates the contract sooner).

Articles 88 and 120 of the UAE Labour Law provide summary dismissal by the employer on one of the 11 exhaustive grounds. As per the demand of 121 Article of the legislation, an employee may legitimately resign before the contract expires.

These two methods for an employer to properly end an unlimited contract following the UAE Labour law:

First, a ‘legitimate’ (i.e. related to performance) cause is highlighted (the UAE Labour Law stipulates a 30-day minimum notice period). However, the parties might agree in the contract to lengthier notice periods);

Second, summarily (with no highlights and no resignation gratuity) according to the 11 comprehensive total misconduct points listed in the 88 articles and the 120 Articles of the UAE Labour Law.

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