Types of Employment Contract in UAE

Any of the following situations will result in the termination of an employment contract:

• In the case of limited contracts, after the designated term expires, except such contract is explicitly or implicitly renewed.
• If an employee passes away or becomes fully unable to work as confirmed by a medical certificate.
• Both parties agree to end the contract, as long as the employee’s acceptance is in written format.

Any of the following situations will result in the termination of an employment contract:

• In the case of unlimited contracts, both the parties discretion provided proper notice is given and the reasons for termination are not arbitrary.
• If an employee passes away or becomes fully unable to work as confirmed by a medical certificate.
• Both parties agree to end the contract, as long as the employee’s acceptance is in written format.

If an employer terminates an employee for a cause other than those listed in Article 120 of the UAE Labor Law, the employer must pay the employee three months’ remuneration or remuneration for the remainder of the contract time whichever is less, in addition to their normal End of Service Benefits (EOSB) privilege.

If an employer terminates an employee under an unlimited contract for a cause other than those listed in Article 120 of the UAE Labor Law, the employee will be entitled for a notice period or compensation in substitution of notice period in compliance with the contract of employment in addition to their End of Service Benefits (EOSB) rights.

If an employee wants to end the limited contract for reasons except that listed in Article 121 of the UAE Labor Law, the employee must pay the employer as compensation a sum equal to half a month’s remuneration for three (3) months or the remainder of the contract duration, whichever is less.

If an employee wants to end the unlimited contract for reasons except that listed in Article 121 of the UAE labor law, the employee must pay the employer compensation in line with the contract of employment or payment in place of notice period based on final remuneration unless the employee quit in accordance with UAE Labor Law Article 121.

A limited contract must include a notice period of at least one month and up to three months.

An unlimited contract can be cancelled at any time by either the employer or the employee if the contractual written notice period is met, which is normally not less than 30 calendar days.

For Resignation:

When the service of an employee is less than 5 years, there is no eligibility.

If his/her service is more than 5 years, then the eligibility factor is considered,

• Till the end of the fifth year, each year of service is worth 21 days of salary.
• 30 days of salary for each subsequent year after the fifth year is completed.

In case of completed contract, Employee is eligible for full Gratuity.

For Resignation:

If service period is less than one year, No gratuity. When the service time is more than one (1) year but less than three (3) years, he/she is considered eligible for one-third (1/3) of the end of service (1/3 *21).

When the service time is more than three (3) years but less than five (5), he/she is considered eligible for two-third (2/3) of the end of service (2/3*21).

If his/her service is more than 5 years.

• Till the end of the fifth year, each year of service is worth 21 days of salary.
• 30 days’ salary for each subsequent year after the fifth year is completed and should be allocated for any uncompleted years.

• When the employee has completed one (1) year of service, then he/she will get 21 days of salary for each year of service. If service period is less than one year, No Gratuity.

When the service is more than 5 years, eligibility factor is as follows:

• 21 days of salary for each year of service until the 5th year is completed. After the fifth year, you will receive 30 days of salary for each additional year which should be allocated for any years that aren’t completed.

• When the employee has completed one (1) year of service, then he/she will get 21 days of salary for each year of service. If service period is less than one year, No Gratuity.

When the service is more than 5 years, eligibility factor is as follows:

• 21 days of salary for each year of service until the 5th year is completed. After the fifth year, Employee will receive 30 days of salary for each additional year which should be allocated for any years that aren’t completed.