23rd September 2017
In the UAE, there are two types of Employment Contract - Limited and Unlimited. These are registered with the Ministry of Human Resources and Emiratization (MOHRE) when applying for an employee's visa. They confirm the terms of the employee's engagement, such as their designation, basic salary and any allowances, probation period and number of days off per week etc.
What is the difference between a Limited Contract and an Unlimited Contract?
A Limited Contract
A limited contract is a fixed-term contract usually linked to the duration of the residency visa (2yrs). It automatically terminates at the end of the term unless agreed by both parties to renew. If the employer wishes to terminate early there is a compensation penalty equivalent to three months salary or the remaining amount of the term if it is less than three months. If the employee terminates early there is a compensation penalty of 1/2 of three months salary or 1/2 of the remaining term if it is less than three months. End of service gratuity is applicable providing the employee has completed more than one year. However, if the employee terminates the contract they are not entitled to gratuity unless they have completed five years service.
An Unlimited Contract
An unlimited contract is the most common because it is the most flexible. It is an open-ended contract. The notice period is usually 30 days unless both parties agree a longer notice period. End of service gratuity is applicable providing the employee has completed more than one year. However, if the employee terminates, the gratuity is reduced by 2/3 if they have completed between 1-3 years and by 1/3 if they have completed between 3-5 years. There is no reduction if they have completed five years service or more.
For assistance with your UAE Employment contracts and visa processing, please Email Gateway at: info@GatewayToAbuDhabi.com
Written by Jenny Hunt, Founding Partner & CEO, Gateway Group of Companies, Abu Dhabi UAE
Gateway is a multi-award-winning company formation expert. It provides a corporate, nominee sponsorship platform focusing on security and control for the foreign company. It's concierge PRO services help companies to stay compliant by managing their government transactions, such as business setup, visa processing, trade license renewals and permit applications.
For more information about how Gateway could help your organisation by saving you time and removing the hassle so that you can focus on developing your Abu Dhabi business, Email Gateway at: info@GatewayToAbuDhabi.com
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