According to Labor Law No. 8 of 1980, there are two types of employment contracts: a fixed-term contract and an open-ended contract. The difference lies in the provisions of end-of-service compensation and the termination of an employee’s service. In 2018, the UAE introduced a part-time contract pursuant to a ministerial decision.
Employment contracts in the private sector
Unless the contract is renewed, the Labor Law defines a specific contract in the Emirates as one that is signed by the employer and the employee and is concluded between them with knowledge of the beginning and ending dates of the work period. In the event that the work period is not renewed, the contract will automatically terminate.
When an employee needs to be assigned to handle little projects or ones that have a set deadline, the employer in the Emirates employs the specialized contract. The length of the specified employment contracts has been adjusted to a maximum of two years, renewable, in accordance with recent changes to the labor legislation and regulations in the United Arab Emirates. For four years, just like it used to be.
In the UAE, the defined contract expires in a number of circumstances, such as:
- the mutually agreed-upon contract term's expiration without extension
- the consent of the employer and employee to end the employment arrangement within the predetermined time frame
- During the designated contract's validity period, one of the parties may cancel it, but that party must adhere to the following procedures:
- giving written notice to the other party of the decision to end the agreement before the termination date for a duration that will be decided upon by the parties; this duration cannot be less than one month nor greater than three months.
- All work requirements are carried out by both parties through the conclusion of the notice period.
- Payment for termination as mutually agreed upon, as long as it doesn't surpass three months' worth of salary
- If any party ends this agreement without first consulting the legal processes outlined in the preceding clause, that party will be held legally responsible for the consequences.
- If an employee violates any of the provisions outlined in Article 120 of the Labor Regulation Law, the employer is entitled to terminate the employment agreement.
Unspecified contract in the Emirates
We will now discuss the indefinite contract, which is an open-term, flexible contract that is frequently used in the United Arab Emirates, in case you're wondering what the differences are between fixed and indefinite contracts in the Emirates. If one of the parties notifies the other in writing and the notice period is not less than one month, the parties may mutually agree to cancel the indefinite-term contract. Throughout the notice period, each contract party is required to abide by the terms of the agreement and the applicable laws.
The agreement is deemed to be dissolved automatically and without prior notice if any party fails to comply with its conditions. In order to protect its rights or receive compensation, the aggrieved party may also bring legal action against the offending party.
There are various reasons why an indefinite contract may be ended, such as:
- both parties' consent
- one party's termination of the agreement after giving the other notice and continuing to carry out its obligations within the warning period
- If one of the parties ends the agreement without agreeing to and carrying out the obligations outlined in it, this is regarded as grounds for termination, and the party that ends the agreement will be responsible for any repercussions.
- If an employee violates any of the provisions outlined in Article 120 of the Labor Regulation Law, the employer is entitled to terminate the employment agreement.
