What is Unlimited Contracts in UAE?

The unlimited contract in UAE has undergone significant changes with the new labor law for limited contract in UAE issued in 2021. Companies must convert their employees’ unlimited contract UAE into fixed-term contracts.

In this article we will talk, about, what is unlimited contract in UAE, the notice period for unlimited contract in UAE. MOHRE limited contract waiver, new labour law for limited contract in UAE and no more unlimited contract in UAE.

Understanding Unlimited Contracts in UAE

Unlimited employment contracts have undergone significant changes with the new labor law issued in 2021:

That means, an unlimited contract UAE is one in which no end date is specified. It allows for a continuous employment relationship without time restrictions. Some of the important changes are:

Abolition of Unlimited Contracts:

According to the new labor law, it has eliminated the option of unlimited contracts.  That is all contracts must be temporary or limited.

Protection against Discrimination:

The law guarantees equal rights. This offers protection to workers against discrimination.

New Working Models:

Part-time work such as flexible working hours and complementary vacations is introduced.

Therefore, the law set out specific objectives, such as:

Elasticity and Resilience:

The unlimited contracts improve the flexibility and sustainability of the labor market.

Worker Protection:

The employee well-being at the center guarantees a safe and healthy environment.

Competitiveness and Productivity:

Attracting and retaining talent. It also includes empowering women and improving competitiveness.

Balanced Rights.

The law ensures that both employer and worker have equal rights and can claim them as needed.

In the UAE, the new labor law seeks to create a flexible and competitive business environment. While protecting the rights of the worker.

Definition and Duration

According to the unlimited employment contract in UAE, it does not specify an end date. On the other hand, limited contracts have a predetermined duration. With no time restrictions, unlimited contracts offer a continuous employment relationship.

An unlimited contract in UAE can be said to be for an indefinite time period. It is used when hiring an employee permanently. Not having a fixed expiration date can be terminated by mutual agreement. The termination can be held with both party’s consent. It can be done with the necessary notice mentioned in the employment contract.

For both employers and employees, unlimited contracts are more flexible. For instance, both parties can terminate the contract. The termination proceeds as long as there is a signed mutual agreement and 30 days’ notice is given. Ideally, these contracts are for long-term employees and are considered permanent.

So, an unlimited-duration employment contract must specify both:

• The date of commencement of work and
• The amount of remuneration.

So, unlimited contracts in the UAE provide stability and flexibility to employees, allowing for a continuous employment relationship without time limits.

Key Differences Between Limited and Unlimited Contracts UAE

In the context of labor contracts, the key differences between a limited and an unlimited contract UAE are fundamental to understanding the obligations and rights of employers and employees.

Limited Contract UAE:

Definition: A limited contract, also known as a fixed-term contract, has a specific end date. It could be a one-year or six-month contract.

Duration: The employment period is clearly stated. The contract is considered fulfilled, on reaching the expiration date,

Flexibility: The limited contract offers less flexibility for the employer and the employee. Cannot be automatically extended beyond the termination date.

Advantages: Predictability, protection against unjustified dismissal.

Disadvantages: Less stability, frequent renewals.

Responsibilities: Both parties must comply with the conditions in the contract. On termination, before the expiration, there may be penalties.

Unlimited Contract UAE:

Definition: An unlimited contract UAE, also called an indefinite contract, has no predetermined termination date. It allows for a continuous employment relationship without time restrictions.

Duration: The unlimited contract can last indefinitely. It can be as long as both parties agree. In short, there is no specific time limit.

Flexibility: The unlimited contract provides greater flexibility. Both parties can renew the contract or terminate it with adequate notice.

Responsibilities: In an unlimited contract, the employment relationship is continuous. Obligations and rights persist until otherwise agreed.

Advantages: Stability, greater job security.

Disadvantages: Less flexibility for the employer.

Therefore, in summary, the choice between a limited and an unlimited contract UAE depends on the specific needs of the company and the employee. Both types have their own legal and financial implications.

An Overview of Contract Variances

According to the new labor law, UAE labor laws underwent significant changes.

Consequently, the new labor law has eliminated unlimited contracts UAE. Now, all contracts must be limited or temporary. Hence unlimited contracts UAE used to allow labor relationships without time restrictions, but are no longer an option.

Also, the law guarantees equal rights and protects workers against discrimination on any grounds. This strengthens employees’ rights and creates a fairer environment.

Then, this new law, introduces flexible options such as part-time work, flexible working hours, and complementary vacations. So, employees may work for more than one employer for a specified number of hours or working days.

That is why, Employers must now limit employment contracts. They must change indefinite-term contracts to fixed-term contracts of up to three years, which are renewable.

Probationary periods must not exceed six months, and termination requires a notice of two weeks.

Employers cannot now force workers to leave the country after leaving their job. Former employees have up to 180 days to find other employment without overstaying their visa.

In summary, the deviations in UAE labor contracts seek to balance the rights of employers and employees, while offering more flexible options and protection against discrimination.

Employee Rights and Employer Obligations

The labor law regulates the rights and obligations of employees and employers:

Employee Rights in UAE:

Effective Occupation: The worker has the right to effective occupation during the working day.

Promotion and Training: He/she must receive opportunities for promotion and on-the-job training.

Non-Discrimination: The employer must not discriminate against the worker when accessing a job.

Physical Integrity and Privacy: Guarantee physical integrity and privacy.

Punctual Remuneration: He/she has the right to receive punctually the agreed remuneration.

Other Rights: The employment contract establishes specific rights.

Employer Obligations:

Information to the Worker: When the employment relationship lasts more than four weeks, the employer must inform the worker in writing of the essential elements of the contract and the conditions of execution.

Delivery to Legal Representatives: It is necessary to deliver a contract copy to the legal representatives of the workers.

Communication to the Public Employment Service: Employers are obliged to communicate to the Public Employment Service the contents of the employment contracts and their extensions.

Duties of the Worker:

Fulfillment of Obligations: The worker must comply with the specific obligations of his job in accordance with good faith and diligence.

Safety and Hygiene: He must comply with the established safety and hygiene measures.

Orders of the Employer: Must follow the orders and instructions of the employer in the exercise of his managerial function.

Not to Compete with the Company: May not perform the same activity as the company in competition with it.

Labor law in UAE seeks to balance the rights and duties of workers and employers, ensuring a fair and productive labor relationship.

Grounds for Termination and Renewal Process

The termination grounds may vary depending on the contract type and the specific circumstances. The residency visa renewal process is also crucial. Especially to maintain legal status in the country. In the next part, we address both issues:

Grounds for Termination of Contract:

Breach: Failing to comply with the conditions of the contract may result in termination.

Mutual Agreement: Employee and employer can agree to terminate the contract amicably.

Legal Causes: The legal clause includes fraud, violation of labor laws or serious breach.

Force Majeure: Unforeseeable events, such as natural disasters or political conflicts, may justify termination.

UAE Resident Visa Renewal Process:

Residency Visa Requirements: Investors, employees and property owners can apply for renewal of their residency visa. They must meet specific requirements according to their category.

Obtain Entry Permit: The sponsor must obtain an entry permit online.

Apply for the Resident Visa: Submit the application along with the required documents.

Pay Visa Fee: You must pay the appropriate fee.

Visa Stamping and Emirates Identification: Visa stamp in the passport and issue an Emirates ID card.

The cost varies according to the duration of the visa and the category. In addition, work visas and partner/investor visas have different fees.

As well, understanding the grounds for termination and the renewal process is essential to maintaining a successful and legal stay in the UAE.

UAE Labor Law and Unlimited Contracts 

UAE Labor law regulates the relationship between employers and employees. Let me summarize the key aspects related to indefinite contracts in UAE:

Also, unlimited contract UAE is an employment agreement without a specific end date, which, does not set time limits for the provision of services.

The different forms for specific situations in which the contract can be formalized include written or verbal arrangements, but specific situations necessitate a written contract.

• Part-time or fixed-discontinuous contracts.
• Home work contracts.
• When the employer is a Spanish company abroad.
• According to the collective bargaining agreement in force.

The law establishes that among the rights of the worker are:

Fixed Salary: He has the right to receive a fixed salary with a minimum amount stipulated by law.

Paid Vacations: He is eligible for paid vacations

Limited Schedule: Must comply with an established work schedule.

Overtime Pay: Compensation for overtime worked is entitled to you.

Weekly Rest: You must enjoy a weekly rest day.

The termination of the Employment Relationship may be by:

• Both the company and the employee may terminate the employment relationship.
• In case of voluntary termination, the employee must comply with the stipulated notice.
• If the company terminates the agreement, it must compensate the employee.

In summary, indefinite contracts in the UAE provide stability and rights to workers, while companies must comply with legal obligations.

Salary and Additional Benefits

Salary and additional benefits vary by industry, experience level and position. Below is an overview:

Salaries in UAE can be very competitive due to the economic prosperity and lack of income taxes. Also, they vary by occupation, but some rough examples are:

• Professionals: Experienced professionals can earn between AED 10,000 and AED 50,000 per month.
• Unskilled workers: They can earn around AED 2,000 per month.

Some of the additional benefits that employees may receive are:

• Housing: Many companies provide housing or a housing allowance.
• Transportation: Some companies provide free transportation or an allowance to cover transportation expenses.
• Health Insurance: Most employers offer health insurance for employees and their families.
• Airline Tickets: Some companies provide annual airline tickets for employees to visit their home country.
• Education: Some packages include education for children.
• Bonuses: Employees may receive annual or quarterly bonuses.
• Paid Vacation: Paid vacation based on seniority and contract is offered.

Attractive salaries and benefits offset the high cost of living in Dubai. The lifestyle in the UAE can be luxurious, with entertainment, dining and recreational options.

Final Thoughts and Practical Insights (2024)

It is always important to research thoroughly before making employment or immigration decisions, either through official websites or reliable sources of information. In addition, it is good to seek legal and professional advice to carry out these processes.

Also, important that both employees and, employers know their rights and obligations, as labor law protects both parties and guarantees a fair relationship. As well, additional benefits such as housing, transportation and, health insurance can make a difference in the quality of life.

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