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Limited Labour Contract - UAE Labour Law

 
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.” (KT).

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).

Breaking a limited contract
Q:
I am working in Sharjah under a two-year limited contract. Recently, I was offered a job in a Dubai-based company and they want me to join by next month. Can I resign before end of the contract?

A: As per Article 116 of the UAE Labour Law, you shall be required to compensate your employer for any loss he may sustain as a result of the termination of the contract, provided that the amount of compensation shall not exceed half the workers remuneration for three months or the residual period of the contract whichever is shorter unless the contract contains a provision to the contrary. Therefore, you need to inform your employer in advance that you wish to resign.
However, the employment agreement, according to Article 113, can be terminated only by both parties’ acceptance. This can be done through submitting a resignation to the employer and giving a notice period of 45 days.

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?

You have not mentioned about the nature of your employment contract as to whether the same is of limited or unlimited duration. And therefore, our response is based on your working on an unlimited period employment contract vis-ŕ-vis limited period employment contract. In accordance with the labour regulations applicable at the JAFZ, the presence of a written contract drawn on JAFZA template signifies the existence of a limited period contract. Otherwise, it is presumed that the employer and the employee have an unlimited period contract between them. Owing to this, the rules pertaining to termination of employment will follow the provisions of the Federal Law No 8 of 1980 on the Regulation of Labour Relations (the ‘Labour Law’).

In view of the foregoing, if your employment contract is of unlimited duration, then you are within your rights to terminate your employment by giving a prior notice of 30 days. This is in accordance with Article 117 of the Labour Law which states:

“(1) Both the employer and the worker may terminate a contract of employment of unlimited duration for a valid reason at any time following its conclusion by giving the other party notice in writing at least 30 days before the termination.”

However, it may also be noted that if the employee fails to give proper notice of termination or reduces the period of notice, then he shall be liable to compensate his employer for the number of days so reduced. This is in accordance with Article 119 of the Labour Law which states:

“Where an employer or a worker fails to give the other party notice of the termination of the contract or reduces the period of notice, the party obliged to give notice shall pay the other party compensation, called “compensation in lieu of notice” even where no prejudice has been sustained by the other party as a result of such failure or reduction. The said compensation shall be equal to the worker’s remuneration in respect of the entire period of notice or the time by which it was reduced. Compensation in lieu of notice shall be calculated on the basis of the remuneration last received, the case of worker remunerated on a monthly, weekly, daily or hourly basis or in the case of a worker remunerated at piece rates, on the basis of the average daily remuneration referred to in article 57 of this Law.”

Pursuant to the foregoing, if you were employed under an unlimited period contract, and you had given a prior notice of 15 days instead of the required 30 days, then you shall be liable to compensate your employer for the reduced period of notice that is, your salary for 15 days calculated on the basis of your last drawn full salary.

If however, your employment was of limited duration, you will be liable to compensate your employer with an amount equal to your 45 days’ remuneration. This is in accordance with Article 116 of the Labour Law which states:

“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.”

In view of this, you may be required to compensate your employer for an amount, which is equal to your salary for 45 days.

Further, you are not required to repay your employer for the cost of your employment visa, as this is against the laws of the UAE. The issue of repayment of training expenses will depend on the applicable regulations in JAFZ and also in accordance with the specific tewrms in your employment contract with respect to training.

In view of the foregoing, you may try and prevail upon your employer to cancel your visa in accordance with the law. However, if you and your employer fail to settle the matter amicably, in accordance with the provisions of law, you may consider to approach the relevant section at Jebel Ali Free Zone Authority, which deals with the disputes between the employers and employees. (KT)

Q: 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? Do I need to give any money to my current employer?

A: Pursuant to your queries, 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.” (KT)

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Ministry of Labour  
Timing: Saturday to Thursday 7:30am to 7:00pm
Call Centre: 800 665
Website: www.mol.gov.ae
Tags: What is limited contract and Unlimited contract in UAE? Can I resign from the job before completion of my limited contract?

   

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