What is Limited Labour Contract UAE ?

The Ministry of Labour entitles the employee who completed two years in service with the employer to transfer to a new employer without the need for No Objection Certificate but for this purpose it required that the contract shall be for unlimited period. But if the contract is for a limited period, the employee must not break the contract before the term, otherwise, he shall lose his labour rights. Besides, the employer would be entitled to apply for the Ministry of Labour to impose a one-year ban on the employee.

End of service benefits for limited contract holder

If an employee who is bound by a limited period contract leaves his work before the expiry of the contract period, then he/she shall not be entitled to any end of service benefits unless he/she has completed five years of continuous service. This is in accordance with Article 138 of the Labour Law which states: “Where a worker who is bound by a contract for a limited period leaves his work of his own accord before the expiry of his contract period, he shall not be entitled to severance pay unless his continuous period of service exceeds five years.”

Frequently Asked Questions

I am working on a limited period contract, which I renewed at the end of two years. After a month into the renewed contract, I am planning to join another company. Is there any legal problem in changing the visa?

Pursuant to your queries (as I understand them), it should be noted that you may not take up the employment with the new employer for one year. Article 128 of Federal Law No. 8 of 1980 regarding Regulation of Labour Relations (Labour Law) states, ‘Where a non-national worker leaves his work without a valid reason before the expiry of a contract for a limited period, he may not, even with the employer’s consent, take up other employment for one year from the date on which he left his work. It shall not be lawful for any other employer who is aware of the fact to recruit such worker to keep him in his service before the expiry of such period.’

In case your current employer is willing to provide you the NOC to work with another employer then the issue of labour ban may not arise. But in case your employer is not willing to provide the NOC and wish to cancel your labour contract, the Ministry of Labour may impose a labour ban on you.

However, in the event a ban gets imposed, your prospective employer may apply for lifting the ban based on your professional qualification and or as per the salary offered by your prospective employer.

Any party breaching a limited period employment contract may compensate the other party by:

(a) In case of breach by the employer: The employer shall be liable to compensate the employee with three months of remuneration as stated in Article 115 of the Labour Law, which reads as follows: ‘Where an employment contract is for a definite term and the employer revokes it for reasons other than those specified in Article 120 he shall be required to compensate the worker for any damage the latter sustains, provided that the amount of compensation shall in no case exceed the aggregate wage due for a period of three months or the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract.’

(b) In case of breach by the employee: The employee shall be liable to compensate the employer for up to half the employee’s remuneration for three months in accordance with Article 116 of the Labour Law which reads as follows: ‘Where a contract is revoked by the worker for reasons other than those specified in Article 121, he shall be required to compensate the employer for any damage the latter sustains as a result, provided that the amount of compensation shall not exceed half a month wage for three months or for the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract.’

A limited contract cannot be terminated before completion

Q: My wife has been working in a ladies saloon for almost four years under a contract for limited period which expires next year, she is on my sponsorship. My questions here are; Can my wife leave work immediately or by giving three months notice to the company as per the side contract not labour contract? The side contract mentions three months notice. If the company does not accept the resignation, will the Ministry of Labour impose a work ban on my wife, though she is under my sponsorship? Is it a must to work during the notice period in a limited contract? Please advise.

A: Your wife is working on a contract for a limited period and if the contract is terminated pre-term, she will lose her labour rights except the right related to leave only. Also, the wife might be requested to compensate the employer an amount equivalent to a salary of 45 days if the employer proves that he suffered a loss or was affected by such behaviour.
Finally, the employer might request the Ministry of Labour to impose a one-year ban on the wife due to this violation even if the wife is not under the company’s sponsorship. There is no notice period in a limited contract (GN).

Compensate employer if you don�t serve notice period

If the employment contract is of unlimited duration, employee has the right to terminate the employment by giving a prior notice of 30 days.

I have been working at an entity based at the Jebel Ali Free Zone (JAFZ) in Dubai for the last 20 months. I submitted my resignation on a notice period of 15 days instead of the required 30 days, as I had to return to my home country urgently. The company had sent me for offshore field service jobs and also gave me some training during this period. The company has asked me to repay the money it spent on my visa and training, along with 45 days’ full salary, to proceed with the cancellation process. Do I have to pay the money?

However, in the event a ban gets imposed, your prospective employer may apply for lifting the ban based on your professional qualification and or as per the salary offered by your prospective employer.

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