Employment Contract in Dubai

Updated on Thursday 16th February 2017

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There are two types of employment contracts in Dubai: limited term contracts and unlimited term contracts. Of course, there are a few differences between these two, like the treatment of statutory, termination consequences, gratuity entitlement and end of service.  The labor contracts are required to be written in both Arabic and English (within the UAE), mentioned our accountants in Dubai. This is mandatory because, especially within Dubai, the workforce is mostly expatriate, so the English language is accepted for international business contracts. Now, although the employee will have two contracts, in two separate languages, if there are any discrepancies within the English one, the Arabic contract will prevail. 

Limited term contracts in Dubai

Basically, a limited term contract is signed for a certain period and, most common, is directly linked to the duration of the residency visa in UAE (United Arab Emirates). This type of contract will end automatically at the specified date, unless an early termination is involved or if the commitment is renewed by both parties. They are usually offered to employees who are needed for specific projects and the duration is known in advance. 

This contract type can be renewed, only with the consent of both parties and, at that point, can be turned into an unlimited contract. In the case of early termination, under the UAE labor law, the employee is entitled to a minimum of three months remuneration (allowances and salary included). On the other hand, if the worker wants to terminate the contract earlier than the discussed date, he/she is liable under the law, to pay half of three months early termination compensation to the employer.

Service gratuity calculator

First of all, an employee is entitled to end of service gratuity if he or she has completed a year or more of continuous services. The calculations are as follows:

-    During the first five years of service, there is a basic pay of 21 calendar days;
-    After the five years, there is offered 30 calendar days basic pay. 

Unlimited term contracts

This type of contract is open-ended and can be terminated for various reasons (all under the UAE labor law). They are usually viewed as more flexible and, for this reason, they are more commonly used in the UAE. When it comes to ending such a contract, accounting firms in Dubai specify these two main ways:  

-    with a valid reason on notice,
-    without notice, where no end of service gratuity is offered.

If the employee wants to terminate the contract, he or she has to provide the employer with a notice of a minimum 30 calendar days or longer. As an alternative, the worker can end it without notice – specified under Article 121 of the Labor Law, in UAE. Same as for the limited term contracts, after one year of service, the employee is entitled to end of service gratuity: 21 calendar days for each year (in the first five years) and 30 calendar days after every additional year. Here are the minimum specifications for the two types of contracts - the limited term contract and the unlimited term contract.  

The specifications for the limited term contract: 

• the date of its conclusion;
• the date on which work begins;
• the nature of the work;
• the workplace;
• the amount of the remuneration; 
• the duration.

The specifications for the unlimited term contract:

• the date of its conclusion;
• the date on which work begins;
• the nature of the work;
• the workplace;
• the amount of the remuneration.

If there are any other questions regarding the employment contract, audit firms in Dubai or if there is a need for other accounting services in Dubai, do not hesitate to call us


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