What is an unlimited contract?
An unlimited contract term is open-ended and may be terminated for various reasons under the UAE Labour Law. An unlimited contract has only a start date without any end date. Anyone of both parties may terminate the employment contract under unlimited term with a 30 days notice period. If the employer fails to abide by obligations under Article 121 of the UAE Labor Laws, the employee has rights to terminate the contract.
An unlimited contract has only a start date without an end date. Anyone of both parties may terminate the contract with a 30 days notice period.
Under Article 121, the employee could leave the work without notice if the employer breaches his obligations, as outlined in the contract, or the employer or the legal representative thereof assault the worker, according to the Gulf News.
The UAE Ministerial Decree 766 of 2015 – issuing of new work permits (unlimited contract) – states that new visas will be granted (i.e., no labour ban) to employees who were employed on an unlimited contract where:
There is mutual consent between the parties provided six months has been served. The six-month service is not necessary for employees with high school certificate or greater qualifications.
One party gives at least 30 days’ notice (1 and 3 months), honors contractual notice and has six months’ service. The six-month service is not required for employees with high school certificate or higher qualifications.
The employer terminates the employee for no fault of the employee, again provided six months’ service has elapsed. No length of service for employees with high school certificate and above.
The employer has failed to meet their contractual obligations. Example, non-payment of wages for 60 days.
The employer ceases to operate.
How may an unlimited contract term be terminated by an employer?
Under the UAE Labour Law, there are two main ways for a company to terminate an unlimited term contract legitimately:
a. For a ‘valid’ (i.e. performance related) reason on notice (the UAE Labour Law provides for a minimum notice period of 30 calendar days. However, the parties are entitled to agree on longer notice periods in the contract);
b. Summarily (without notice and end of service gratuity) for one of the 11 exhaustive gross misconduct reasons set out in Articles 88 and 120 of the UAE Labour Law.
The employer may terminate the employee without prior notice if:
a – the employee is with a fake passport or a false identity, or the employee submitted false certificates for the employment.
b – the employee is working under probation period, and the worker has been terminated during or at the end of the probation.
c – the employee committed an error which costs material losses, the Labour Department must be notified within 48hours of the incident of the knowledge of the occurrence.
d – the employee violated the safety-related instructions at work or in the workplace if instructions are written and posted in work location, and if he is illiterate he is notified.
e – the employee fails in his primary duties as per in the employment contract, and fail to remedy why he is failed despite an investigation and a warning on his failure, he will be terminated in case of the tendency of a convicted criminal.
f – the employee disclosed the secret of the organisation where he is working.
g – the court convicts the employee for a crime of honour, honesty or public ethics.
h – the employee is found in the drunkenness state or under the influence of a narcotic during work hours.
i – the employee assault the employer, manager, or co-worker during the work.
j – the employee is absent from the work without any valid excuse for absence, for more than 20 nonconsecutive days in a year, or for more than seven consecutive days.
Employees who absent from work without any notification to his management for more than seven consecutive days will be listed as absconders with the Ministry of Labour.
How may an unlimited contract term be terminated by an employee?
An employee may resign by providing the employer with the contractual notice period (which must be a minimum of 30 calendar days, or longer, as per the contract of employment). The employee could resign via Email if he is using company Email ID or through faxing or written resignation.
Alternatively, the employee may resign without notice as set under Article 121 of the law.