Limited Contract UAE: Understanding the Terms, Benefits, Duration, Restrictions, Termination, and More

Moh. Fajar

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Limited Contract UAE: Understanding the Terms, Benefits, Duration, Restrictions, Termination, and More

Welcome to our comprehensive guide on limited contract UAE (United Arab Emirates)! If you’re a layperson seeking clear and friendly information about limited contract in UAE, you’ve come to the right place.

In this blog post, we’ll provide an upbeat overview of limited contract in UAE, explain their importance, and delve into the essential details you need to know. Let’s get started!

Understanding Limited Contract UAE

What is a Limited Contract in UAE?

A limited contract UAE is a type of employment agreement with a fixed duration. Unlike unlimited contracts that have no set end date, limited contracts specify the duration of employment.

This contract ensures that both employees and employers are aware of the agreed-upon employment period, offering clarity and security for all parties involved.

Understanding Limited Contract UAE
Understanding Limited Contract UAE

The Role of UAE Labor Law in Limited Contracts

The role of UAE labor law in limited contracts is crucial for ensuring fair and lawful employment practices. The UAE labor law serves as a comprehensive framework that outlines the rights and obligations of both employers and employees, including those specific to limited contracts.

The labor law provides a legal structure that governs various aspects of limited contracts, such as working hours, leave entitlements, termination procedures, and dispute resolution mechanisms.

It sets minimum standards that employers must adhere to, ensuring the protection and well-being of employees.

Here are some key areas where the UAE labor law plays a significant role in limited contracts:

  1. Contract Formation: The labor law sets out the requirements for a valid employment contract, including the need for a written agreement that clearly outlines the terms and conditions of employment. It ensures that limited contracts are properly documented and agreed upon by both parties.
  2. Employee Rights: The labor law safeguards the rights of employees under limited contracts. It establishes provisions for fair treatment, non-discrimination, and protection against unfair practices. These rights encompass various aspects, including wages, leave, working conditions, and occupational health and safety.
  3. Employer Obligations: The labor law defines the obligations and responsibilities of employers towards employees working under limited contracts. It includes providing a safe and healthy work environment, adhering to working hour limits, paying wages on time, and ensuring compliance with contractual provisions.
  4. Termination Procedures: The labor law outlines the procedures that employers and employees must follow when terminating a limited contract. It stipulates the requirements for giving notice, settling end-of-service benefits, UAE labour law termination benefits, and handling any disputes that may arise during the termination process. This ensures that terminations are conducted fairly and in accordance with the law.
  5. Dispute Resolution: The labor law provides mechanisms for resolving disputes that may arise between employers and employees under limited contracts. It establishes labor courts and encourages alternative dispute resolution methods such as mediation and arbitration. These avenues help to address conflicts and ensure that parties can seek redress for any violations of their rights.

By recognizing and understanding the role of UAE labor law in limited contracts, both employers and employees can ensure compliance with legal requirements, promote fair treatment, and establish a harmonious work environment.

It is essential to consult the labor law and seek legal advice when necessary to ensure that your rights and obligations are protected and upheld throughout the duration of your limited contract.

Limited Contract Terms

Essential Terms and Conditions in Limited Contracts

When signing a limited contract, it’s important to understand the essential terms and conditions it entails. These terms outline the duration of the contract, salary, working hours, job description, and other key aspects of the employment agreement. Pay close attention to these details, as they form the foundation of your employment relationship.

Contractual Rights and Obligations

Limited contracts establish both rights and obligations for employers and employees. Employers have the responsibility to provide a safe and conducive working environment, timely payment of wages, and adherence to the terms stated in the contract.

On the other hand, employees are expected to fulfill their job responsibilities, maintain professionalism, and respect company policies.

Contract Amendments and Modifications

In some cases, contract amendments or modifications may be necessary. These changes could involve adjustments to the contract’s terms, such as salary increases, changes in working hours, or additional benefits.

It’s crucial to ensure that any amendments or modifications are documented and agreed upon by both parties.

Foreign Worker Contracts in UAE

Considerations for Foreign Workers under Limited Contract UAE

Foreign workers under limited contract UAE should be aware of specific considerations. These may include work visa and sponsorship requirements, which are essential for legal employment in the UAE. Familiarize yourself with the relevant regulations and processes to ensure a smooth transition into your new job.

Work Visa and Sponsorship Requirements

To work legally in the UAE, foreign workers must obtain a valid work visa and be sponsored by their employer. The employer takes responsibility for the sponsorship process, including securing the necessary work permits and residency visas. Be sure to collaborate closely with your employer to ensure a seamless visa application process.

Legal Protection and Rights of Foreign Workers

Foreign workers in the UAE are entitled to legal protection and rights, just like their local counterparts. Labor laws apply to all employees, irrespective of their nationality.

These laws safeguard workers from unfair treatment, ensure timely payment, and address any grievances or disputes that may arise during the employment period.

Limited Contract Entitlements

Entitlements and Benefits of Limited Contract Employees

Limited contract employees enjoy various entitlements and benefits provided under UAE labor law. These include annual leave, sick leave, end-of-service benefits, and access to medical insurance.

Understanding these entitlements is crucial for employees to maximize their rights and well-being throughout their employment journey.

Annual Leave, Sick Leave, and Other Benefits

Under UAE labor law, limited contract employees are entitled to annual leave, which allows for much-needed rest and relaxation. Employees are typically granted a certain number of days off based on their length of service.

Additionally, sick leave is available for employees who are unable to work due to illness or injury. It’s important to familiarize yourself with the specific provisions regarding annual leave, sick leave, and other benefits outlined in your limited contract UAE.

Working Hours and Overtime Compensation

Working hours for limited contract employees are typically set according to the UAE labor law. The standard working hours are 8 hours per day or 48 hours per week. Any additional hours beyond the standard working hours are considered overtime.

Overtime compensation should be provided by the employer in accordance with the labor law, ensuring fair compensation for the additional time worked.

Contract Duration in UAE

Duration of Limited Contracts

Limited contract in UAE have a specific duration agreed upon by both parties at the beginning of the employment relationship. The contract will clearly state the start date and end date of the employment period.

It’s important to note that limited contracts have a maximum duration of two years, after which they may be renewed or terminated based on mutual agreement.

Factors Affecting Contract Duration

Several factors can affect the duration of a limited contract UAE. These may include the nature of the job, project-based work, or the employer’s specific requirements.

It’s crucial to discuss and clarify the contract duration during the negotiation process to ensure that both parties are aligned on the expected employment period.

Probationary Period in Limited Contracts

Limited contracts often include a probationary period, which allows employers to assess the employee’s performance and suitability for the role.

The probationary period typically ranges from 3 to 6 months. During this time, both the employer and employee have the opportunity to evaluate the working relationship and determine if it’s a good fit.

Limited Contract UAE Renewal

Renewal Options and Procedures

Upon the expiration of a limited contract UAE, there are options for renewal based on mutual agreement between the employer and employee.

If both parties are satisfied with the working relationship, they can choose to renew the contract for another term. The renewal process typically involves negotiating new terms, including salary adjustments or other modifications as needed.

Considerations for Contract Renewal

When considering contract renewal, it’s essential to assess your overall job satisfaction, career goals, and potential opportunities for growth.

Evaluate whether the company aligns with your long-term plans and if the terms of the renewed contract are fair and favorable. Take this opportunity to discuss any concerns or desired changes with your employer.

Impact of Renewal on Employment Terms and Conditions

Contract renewal may lead to changes in employment terms and conditions. These changes can include adjustments to salary, benefits, or even a promotion.

It’s important to carefully review the terms of the renewed contract and ensure that you are comfortable with the proposed changes before giving your consent.

Limited Contract UAE Termination

Termination Process and Procedures

it's crucial to adhere to the resignation procedures specified in the UAE labour law resignation and your limited contract UAE
UAE Labour Law Resignation

If you decide to resign from your position, it’s crucial to adhere to the resignation procedures specified in the  and your limited contract UAE. This typically includes providing a written resignation letter to your employer within a specified notice period.

Resignation should be done professionally and amicably, maintaining a positive relationship with your employer. The termination process and procedure for a limited contract in UAE are important to understand to ensure compliance with the UAE labor law.

Let’s explore the specifics of the limited contract UAE termination process and procedure:

  1. Notice of Termination: Either the employer or the employee may initiate the termination of a limited contract. The party seeking termination is required to provide a notice period as specified in the employment contract or the UAE labor law. The notice period varies depending on the terms of the contract, but typically ranges from 30 to 90 days. It is essential to provide written notice of termination, clearly stating the effective date of termination and adhering to the notice period requirements.
  2. Termination Agreement: In some cases, both the employer and the employee may mutually agree to terminate the limited contract before the completion of its specified duration. This can be done through a termination agreement, which outlines the terms and conditions of the termination, including any agreed-upon settlements or benefits.
  3. End-of-Service Benefits: Upon the termination of a limited contract, employees are entitled to receive end-of-service benefits as per the UAE labor law and the terms of their employment contract. These benefits typically include gratuity and any other accrued entitlements. Employers are legally obligated to settle these benefits in a timely manner, following the established procedures.
  4. Clearance Process: Prior to the finalization of the limited contract termination, there may be a clearance process that involves returning company property, settling outstanding dues or financial obligations, and completing any necessary documentation. It is important for both employers and employees to cooperate during this process to ensure a smooth transition.
  5. Dispute Resolution: In the event of any disputes or disagreements related to the termination of a limited contract, both parties should attempt to resolve the issues amicably through negotiation and communication. If a resolution cannot be reached, parties may seek legal assistance and consider alternative dispute resolution mechanisms, such as mediation or arbitration, as prescribed by the UAE labor law resignation.

Remember, it is always recommended to consult the UAE labor law and seek legal advice if you have any specific concerns or questions regarding the resignation process.

Understanding your rights and responsibilities as an employee, as well as maintaining open and transparent communication with your employer, will contribute to a smooth and amicable resignation process.

Termination Benefits and Compensation

Termination benefits and compensation play a significant role in limited contracts in the UAE. These provisions ensure that employees are fairly compensated when their contracts come to an end. Here is the specifics of termination benefits and compensation in limited contracts:

  1. End-of-Service Benefits: When a limited contract is terminated, employees are entitled to receive end-of-service benefits as per the UAE labor law. The calculation of these benefits is based on the employee’s length of service and the terms specified in the contract. End-of-service benefits typically include gratuity, which is a lump sum payment made to employees as a token of appreciation for their service. The amount of gratuity is determined based on the employee’s basic salary and the duration of employment.
  2. Gratuity Calculation: The UAE labor law sets out a specific formula for calculating gratuity in limited contracts. According to this formula, employees are entitled to receive:
    • 21 days of basic salary for each year of service for the first five years of employment.
    • 30 days of basic salary for each year of service beyond five years.
  3. Unpaid Salary and Benefits: Upon termination of a limited contract, employees should receive any outstanding salary, allowances, or other benefits owed to them. This includes payment for any accrued leave days, bonuses, or other financial entitlements specified in the contract. Employers are required to settle these outstanding payments promptly and in accordance with the terms of the contract and the UAE labor law.
  4. Notice Period Compensation: If an employer terminates a limited contract without providing the required notice period as stipulated in the contract or the labor law, the employee may be entitled to compensation. This compensation is equivalent to the salary the employee would have earned during the notice period. It ensures that employees are not unfairly disadvantaged by abrupt terminations and are provided with appropriate financial compensation.
  5. Repatriation Costs: In certain cases, limited contract employees who are non-nationals may be entitled to repatriation costs. This means that the employer is responsible for covering the expenses associated with the employee’s return to their home country. This provision ensures that employees are not burdened with the financial costs of repatriation upon the termination of their contracts.
UAE labour law termination benefits
UAE labour law termination benefits

It is important for both employers and employees to understand the termination benefits and compensation provisions outlined in the limited contract UAE and the UAE labor law.

Employers must fulfill their obligations by providing the entitled benefits, while employees should be aware of their rights and ensure that they receive fair compensation upon termination.

Consulting legal resources, seeking advice from relevant authorities, or engaging legal assistance can help navigate the complexities of termination benefits and ensure compliance with the applicable regulations.

Termination Notice Period in Limited Contracts

Limited contracts typically require a notice period to be given by either the employer or the employee before terminating the contract. The length of the notice period should be specified in the contract and may vary depending on the duration of employment.

Adhering to the notice period is crucial to ensure a smooth transition and maintain a professional relationship.

Employee Rights in Contract Termination

Employees have rights when it comes to contract termination. These rights include receiving all due compensation and benefits, such as end-of-service benefits and unused leave days.

Understanding your rights as an employee will help you navigate the termination process and ensure that you are treated fairly and in accordance with the UAE labor law.

Employer Rights in Contract Termination

Employers also have rights in the contract termination process. They have the right to terminate an employee’s contract if there are valid reasons for doing so, such as misconduct or non-performance.

However, employers must follow the termination procedures outlined in the labor law and the limited contract UAE to ensure compliance and fairness.

Notice Period in UAE

Notice Period Requirements for Limited Contracts

The notice period is a crucial aspect of contract termination in the UAE. The notice period requirements for limited contract UAE should be clearly stated in the contract itself.

It’s important to familiarize yourself with these requirements to ensure that you comply with the notice period when resigning or terminating the contract.

Notice Period Length and Calculation

The length of the notice period can vary depending on the duration of employment and the terms specified in the limited contract UAE. It is typically expressed in days or weeks.

The calculation of the notice period should be done accurately, taking into account any specific provisions in the labor law and the contract itself.

Implications of Non-Compliance with Notice Period

Failure to comply with the notice period requirements can have implications for both employees and employers. Employees who fail to provide the required notice may face penalties or financial repercussions.

Likewise, employers who do not adhere to the notice period may be liable for compensation or legal action. It’s crucial to fulfill the notice period to avoid any negative consequences.

Resolving Limited Contract Disputes

Common Issues and Disputes in Limited Contracts

Disputes can arise in limited contracts due to various reasons, such as disagreements over terms and conditions, unpaid wages, or wrongful termination.

Common issues include breach of contract, discrimination, or disputes related to end-of-service benefits. Being aware of these potential disputes will help you address them effectively if they occur.

Dispute Resolution Mechanisms

To resolve limited contract UAE disputes, there are several mechanisms available in the UAE. These may include mediation, arbitration, or legal action through the labor courts.

It’s advisable to first attempt mediation or alternative dispute resolution methods to reach a mutually agreeable solution. If that fails, seeking legal assistance may be necessary to protect your rights and seek a fair resolution.

Legal Remedies and Procedures

In the event of a limited contract UAE dispute, legal remedies and procedures can be pursued through the UAE labor courts. Seeking legal advice and representation can help you navigate the legal process and present your case effectively.

It’s important to gather all relevant documentation and evidence to support your claim.


In summary, limited contract UAE offer clarity and security with their fixed duration. Understanding the terms, benefits, duration, restrictions, termination, and rights associated with limited contracts is essential.

By being aware of your entitlements, fulfilling your obligations, and knowing the procedures for termination, renewal, and dispute resolution, you can ensure a positive and fulfilling employment journey and have good credit score in UAE.

Stay informed, be proactive, and make the most out of your limited contract experience in the UAE. With compliance and awareness, you’ll navigate your employment with confidence, setting the stage for a successful and rewarding career.

We hope this guide has provided you with valuable insights into limited contract UAE. If you have any further questions or require additional information, feel free to reach out to us. You could also read another article about regulation such as Sharjah Traffic Rules and Regulations.

Best of luck in your employment journey!

Moh. Fajar

I currently residing in Dubai, UAE and work for a multinational company in the technology industry. In my free time, I enjoys exploring the UAE's and becomes a writer in

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