23rd September 2017
In the UAE, there are two types of Employment Contract - Limited and Unlimited. These are registered with the Ministry of Human Resources and Emiratization (MOHRE) when applying for an employee's visa. They confirm the terms of the employee's engagement, such as their designation, basic salary and any allowances, probation period and number of days off per week etc.
What is the difference between a Limited Contract and an Unlimited Contract?
A Limited Contract
A limited contract is a fixed-term contract usually linked to the duration of the residency visa (2yrs). It automatically terminates at the end of the term unless agreed by both parties to renew. If the employer wishes to terminate early there is a compensation penalty equivalent to three months salary or the remaining amount of the term if it is less than three months. If the employee terminates early there is a compensation penalty of 1/2 of three months salary or 1/2 of the remaining term if it is less than three months. End of service gratuity is applicable providing the employee has completed more than one year. However, if the employee terminates the contract they are not entitled to gratuity unless they have completed five years service.
An Unlimited Contract
An unlimited contract is the most common because it is the most flexible. It is an open-ended contract. The notice period is usually 30 days unless both parties agree a longer notice period. End of service gratuity is applicable providing the employee has completed more than one year. However, if the employee terminates, the gratuity is reduced by 2/3 if they have completed between 1-3 years and by 1/3 if they have completed between 3-5 years. There is no reduction if they have completed five years service or more.
How Gateway Group can help with your organisations's visas and PRO services
Gateway's concierge PRO services help companies to stay compliant by managing their government transactions, such as business setup, visas processing, trade license renewals and permit applications. Never over look an expiry date again. For assistance with your UAE Employment contracts and visas email us info@GatewayToUAE.com
Written by Jenny Hunt, Founding Partner & CEO
Gateway Group of Companies, Abu Dhabi & Dubai UAE
Related Gateway Group Blogs
Gateway Group Of Companies
Protect your business and profits and have an efficient business setup in Abu Dhabi and Dubai by engaging the award-winning Gateway Group to deliver our customised business setup, unique local sponsor packages, and visa processing. To establish your business in the UAE, Email us: Info@GatewayToUAE.com
Gateway Group – We’re Pretty Good At What We Do
Best Company Formation Specialists 2019
Best Onshore Company Formation Specialists – UAE
MEA Markets 2019 GCC Enterprise Awards
Best Company Formation Specialists 2019 – UAE
CEO Today Middle East Awards 2019 (Jenny Hunt)
Recognized Leaders in Offshore Company Formation 2019
10 Most Promising Corporate Business Service Providers 2019
Gateway CEO, Jenny Hunt, ranked in
FORBES' Top 100 Most Influential Women in the Middle East
Gateway is ranked in the Top 20 Abu Dhabi blogs to follow