Limited contract resignation in the UAE: all you need to know

It is an indisputable fact that every employee wants good work conditions, a competitive salary, and better opportunities for growth and development. It is not always about the financial increment but sometimes it is more about broadening horizons and getting more experience in their skills or profession.

For professionals considering a transition while maintaining compliance with UAE labor laws, understanding business setup in UAE can also provide an alternative route for those looking to establish their own venture.

As much as anyone is free to migrate from one job environment to another, there are still some due processes to take and facts to consider before terminating your contract for a suitable reason. This is because if you terminate your labor contract in a way or reason contrary to the labor law, you may have to:

Pay some compensation fee to your current employer — When an employee terminates the labor contract for some reasons not specified under the labor law (article 121), they must compensate the employer for any damage sustained in the process.

Fail to receive the end of service benefits — This happens when an employee decides to cancel the employment contract before serving up to one year. There will not be gratuity as stated by the labor law.

May get an employment ban for some stipulated period — This may be the case when an employee terminates the employment contract within the six months probation period. If not mutually agreed by the both parties, the employer may apply under the Ministry of Human Resources and Emiratisation for an employment ban on the employee.

What is limited contract resignation?

UAE limited contract resignation is when an employee under limited or fied labor contract decides to resign or terminate the contract for any reason within or excluded from the UAE labor law. Limited contract on the other hand is when the labor contract is fixed, meaning that it has start and end dates. This means that an employee is hired to work for a specific period or time.

But limited contacts are renewable, which means that you can even work for over 6 years in the same company based on renewals. Each subsequent renewal also has start and end dates which can keep being renewed but in this case there wouldn’t be a probation period anymore.

Limited contract resignation: legal procedure

It is mandatory to follow some legal protocols prior and during the termination of limited contracts. This is to avoid having to face some consequences as stated above if your reasons aren’t specified in the UAE labor law. So following are the necessary legal steps during a resignation under limited contract in UAE:

Prior notice — It is advisable you notify your employer about your intention to terminate the limited contract at least 30 days to the time. But it shouldn’t be more than a 3 month notice.

Adhering to the contract obligation — It is necessary for the employer and employee to respect whatever was specified in the terms and conditions of the contract with regard to when the termination notice is sent. That is the duration of the notice period prior to sending the termination notice. 

Compensating either party — This should be done by either the employer or the employee accordingly as specified in the contract for example:

• An Employee whose contract was terminated unfairly should receive compensation for the remaining months of the contract or as written in the employment contract.
• An employee who has served for a year and more should be entitled to end of service benefits depending on the total period of service.
• An employee who terminates a contract during probation or who didn’t give up to a 30 day notice may have to pay for any damage caused by the sudden exit or for the cost of making employment residence visa.

Reasons for a termination of limited contracts in the UAE

• Situation when the employer and the employee mutually agree to terminate the contract
• When the validity period of the contract comes to an end and isn’t renewed
• When an employee violates any labor law as stated in article 120
• When an employee’s right is breached
• When the employer’s right is breached

Terminating the limited contract without notice

Both the employer and the employee can terminate the contract with the other party without giving notice if the violation is found among those listed on the following link. Click here to read more on the resignation in limited contract UAE and the conditions for terminating a contract with or without giving a prior notice.

Arbitrary dismissal

This is when an employee is dismissed unfairly by the employer for reasons not pertaining to work performance. If the employee is sure of being maliciously fired without a just cause, they can report to the Ministry of Human Resources and Emiratisation where the case will be settled between both parties amicably. 

Inability to settle the case within the ministry may result in transferring the case to court. They will be  offered a letter in this regard. Whoever is justified in court will be compensated by the opposite party.

Check out the MoHRE’s website to learn more about labor contracts and aspects relating primarily to the resignation under limited contracts.
You may want to know more on the MOHRE’s website to know everything about the UAE Labor laws and regulations. Click on the seventh topic to read basically about termination contracts and all you need to know about it.