United Arab Emirates

Limited vs Unlimited Contracts

The labor laws in the United Arab Emirates are primarily governed by the Federal Law No 8 (otherwise known as the Labor Code) and ministerial resolutions issued by the Minister of Labour and Social Affairs. According to Article 38 of the Labor Code, the employment contract may be for a limited or unlimited term.

The most common type of contracts used by employers is those with unlimited term. However, ths does not mean that unlimited contracts are always more advantageous than limited contracts.

Limited Term Contracts

A limited term contract has a fixed duration of employment which both the employee and employer must observe. According to Article 38, the term shall not exceed 4 years and it may be renewed for an equal or shorter term. Renewal is not guaranteed as it will require the mutual consent of the parties.

Unlimited Term Contracts

An unlimited or indefinite term contract is open-ended and will continue to be operative until terminated. According to Article 39, the employment contract considered as an unlimited term contract if:

• it is not written;
• it is concluded for unlimited period;
• it was originally written and concluded for a limited term but both parties, without a written agreement between them, continued to perform it after its expiry; or
• it was originally concluded for the performance of a specific work that had no limited duration or that is recurrent by nature, but the contract continued after completion of that specific work.

Source:
GULF LAW
Essential OFW Guide to UAE
Author: Atty. Barney Almazar
http://www.gulflaw.info/index.php