Hi, I would like to know about terms and conditions of a Limited Employment Contract.
Based on personal experience, I used to work for a company in Dubai under a Limited Contract. I was working as a sales representative in a retail chain inside a shopping mall and I was obligated to continue my duties for two years. If you are wondering what are your options if you have this type of contract and you want to transfer to another company, you can only transfer to a company under a free zone or government.
If you break the Limited contract by resigning from your job, you may get a labour ban that could last up to one year. In order to get rid of this labour ban, you can try to find a job that would require you to have a minimum salary of 5000 Dirhams and submit a high school diploma.
What is a Limited Employment Contract?
As the name suggests, a limited contract is signed between the employer(company) and employee which is bound to expire on the date of the expiry of contract and is for a fixed term of time, usually 2 years. This means a company can employ their employees for a certain period and not renew the contract. An employee who is employed on a Limited Contract has a responsibility to the company till his contract is valid. After the contract expires, the employee need not work for the company.
Why do companies have Limited Contract?
For a company which has most of their projects to be completed within 2 years, there is no need to have more employees on their payroll. In such situations, companies hire employees for a limited period. Limited Employment Contracts also help companies to gauge the performance of their employees over a longer term and if the employee is not up to their expectation, they need not renew the contract for that employee. Hence the burden of termination is not applicable.
What about employees?
Employees who have signed a labour contract should carefully read their employment contract to see whether contract type, whether it is a limited employment contract or an unlimited labour contract. This will help them to understand their rights.
What happens if I resign under Limited Contract?
There are possibilities that as an employee, you would want to resign from your position before the Limited Contract is expired.
If you resign under limited contract without completing your contract term, your employer may impose a 1-year ban. In addition to this the as per UAE Labour Law provisions, the employee will have to pay half of 3 months’ early termination compensation to the employer.
What if the company/employer terminates a Limited Contract?
If your company terminates your contract, the company will have to pay you minimum 3 months’ compensation or compensation for the remaining period of time.
Is there notice period in Limited Contract?
This will depend on the provisions of your employment contract. If it is mentioned that you will have to give a notice period, you will need to intimate your employer of the same.
Do I get gratuity or end of service benefits under Limited Contract?
Yes. You will receive gratuity under Limited Contract if you have completed 1 year of service.