The Definitive Guide to Limited vs Unlimited Contracts in the UAE

Under the Federal Law No. 8 of 1980 on the regulations of labour relations and its amendments (also known as the “UAE labour law”) the employment contracts can be of two kinds ‘limited-term contract’ and ‘unlimited term contracts.

As the name indicates, limited-term contracts are set for a specific term period, while unlimited term contracts are open-ended and do not specify an end term.

How are Employment Contracts Terminated in the UAE?
Under Article 113 of the UAE Labour Law, an employment contract can be terminated for the following three instances:
By mutual agreement of the Parties, provided that the worker's consent is given in writing;
Upon expiry of its term, unless it has been expressly or implicitly extended according to the provisions of this Law;
For the convenience of either party to an indefinite term contract, provided that the provisions of this Law concerning the notice and the valid grounds of termination without arbitrariness are adhered to.

Termination of a Limited-term Contract
A limited-term contract may be terminated by either the employer or the employee mutually according to the terms of Article 113 as cited in this article.

Termination of a Limited Contract by the Employee
In addition, an employer may terminate an employee who is on a limited-term contract immediately without providing any notice period if any of the grounds of termination as specified under clause 120 of the UAE labor law occur.
Article 120 of the UAE law labor law cites the following ten grounds:
If the employee assumed a false identity or nationality or submits forged certificates or documents.
If the employee was dismissed during the probation period.
If the employee has committed any fault which has resulted in the substantial material loss to the employer, provided that the employer notifies the labor department of the incident within 48 hours of his becoming aware of its occurrence.
If the employee disobeys instructions on the safety of work or workplace,
If the employee defaults on his basic duties under the contract and fails to redress such default despite a written interrogation and a warning that he will be dismissed if such default is repeated;
If the employee is finally convicted by a competent court of a crime against honor, honesty or public morals;
If the employee reveals any confidential information of his employer;
If the employee is found in a state of drunkenness or under the influence of a narcotic drug during working hours;
If the employee assaults the employer, the manager in charge, or any of his workmates during working hours;
If the employee absents himself from work without a valid reason for more than 20 non-successive days in one single year, or more than seven successive days

Termination of a Limited Contract by the Employee
In addition to the grounds provided under Article 113 of UAE labor law, an employee can lawfully terminate a limited-term employment contract if:
If the employer fails to honor his obligations towards the employee, as provided for in the contract or this Law. This clause includes instances wherein the employee is not paid his salary and other benefits as per his employment contract.
If the employee is assaulted by the employer or the employer's legal representative.

Termination of an Unlimited-term Contract


Under Article 117 of the UAE labour law, an unlimited term contract may be terminated by either the employer or the employee for a valid reason at any time provided the requirements towards the notice period are met by the terminating party.


A ‘valid reason’ for terminating an unlimited contract should be any reason that is ‘work related’.
Work-related reasons can include amongst others, poor work performance, disciplinary breach, or misconduct on part of the employee or other grounds.


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