The difference between limited and unlimited employment contracts

According to Official sources and UAE Laws-

Limited term contract (fixed-term)

In general, limited term contracts mention the start and end dates of the employment period. Unless the contract is renewed, it is automatically cancelled when it expires.

These contracts are adopted where an employer needs to engage employees for specific projects or specific duration.

According to recent reforms in the UAE's labour market, limited term contracts are for a maximum duration of 2 years, unlike 4 years as before. The contract must also include a notice for termination.

Unlimited term contracts

An unlimited term contract is open-ended, more flexible and commonly used in the UAE. It can be terminated with mutual consent or by giving a notice of 1 to 3 months. The parties involved must honour their obligations throughout the notice period.

Therefore, an employment relationship is deemed to have ended without due process when either the employer or employee terminates the employment relationship without complying with legally mandated procedures.

In this case, the wronged party may initiate legal action and compensation.

Thanks,

Sudhanshu Singh

Under the UAE Labour Law No. 8 of 1980, there are two types of employment contracts. The difference lies in the provisions for the end of service gratuity and termination.

1. limited term contract or fixed-term.

2. unlimited term contract.

In 2018, the UAE implemented the part-time contract system by virtue of a ministerial resolution.

Limited term contract (fixed-term)

In general, limited term contracts mention the start and end dates of the employment period. Unless the contract is renewed, it is automatically cancelled when it expires.

These contracts are adopted where an employer needs to engage employees for specific projects or specific duration.

According to recent reforms in the UAE's labour market, limited term contracts are for a maximum duration of 2 years, unlike 4 years as before. The contract must also include a notice for termination.

Unlimited term contracts

An unlimited term contract is open-ended, more flexible and commonly used in the UAE. It can be terminated with mutual consent or by giving a notice of 1 to 3 months. The parties involved must honour their obligations throughout the notice period.

Therefore, an employment relationship is deemed to have ended without due process when either the employer or employee terminates the employment relationship without complying with legally mandated procedures.

In this case, the wronged party may initiate legal action and compensation.

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Almeshref Advocates and Legal Consultants

Dear Questioner,

My learned colleagues have already given you a basic idea on the difference between both.

If you want to know anything further such as suitability of different contract to different situation and different types of employees, with a special reference to the hospitality industry, please feel free to contact me.

Thank you.