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UAE Labor Law Termination and Resignation in Limited Contracts

UAE Labor Law Guide : Termination and Resignation in Limited Contracts

The United Arab Emirates (UAE) has witnessed remarkable growth and development over the years, attracting a diverse workforce from across the globe. To regulate employment relationships and ensure the welfare of both employers and employees, the UAE has established comprehensive labor laws. One critical aspect of these laws pertains to the termination and resignation procedures in limited employment contracts. In this extensive blog post, we will delve into the intricacies of UAE labor law concerning limited contracts, explore the grounds for termination, and examine the rules and regulations governing resignations.

Understanding UAE Labor Law Limited Contracts :

Limited contracts, also known as fixed-term contracts, are a prevalent form of employment agreement in the UAE. They specify a predetermined period during which an employee is committed to work for an employer. These contracts are often used for project-based work or for filling temporary positions. The duration of limited contracts varies but typically ranges from one to two years, with the possibility of renewal upon mutual agreement.

Grounds For UAE Labor Law Termination by Employers :

Terminating an employment contract, whether limited or unlimited, is subject to specific conditions outlined in the UAE labor laws. In the case of limited contracts, employers have several grounds on which they can terminate an employee:

  1. Expiry of Contract: Once the fixed term specified in the contract concludes, the employment relationship naturally terminates. Employers are not required to provide notice in this case.
  2. Breach of Contract: If the employee breaches the terms of the contract, the employer may terminate it. Common breaches include poor performance, unauthorized absence, and violation of company policies.
  3. Mutual Agreement: Employers and employees can mutually agree to terminate the contract before its expiration. This must be in writing and should outline the terms of separation, including any compensation or benefits due to the employee.
  4. Force Majeure: In exceptional circumstances such as unforeseen disasters, an employer may terminate a contract under force majeure. This is subject to verification by relevant authorities.
  5. Liquidation of the Company: If the company goes through a legal liquidation process, the limited contracts of its employees are terminated.

Termination Procedures by Employers

The UAE labor law mandates certain procedures that employers must follow when terminating an employee under a limited contract:

  1. Notice Period: Employers must provide written notice to employees before termination. The length of the notice period depends on the length of service, as specified in the UAE labor law.
  2. Notice Contents: The notice should include the reasons for termination and the effective date of termination.
  3. Severance Pay: Employers must provide employees with end-of-service benefits, which include accrued gratuity and other entitlements.
  4. Return of Documents: Employers must return all relevant documents and items, such as passports and work permits, to the employee upon termination.

Employee Resignation from Limited Contracts

Employees also have the right to resign from limited contracts, but they must adhere to specific rules:

  1. Notice Period: Just like employers, employees are required to provide written notice to their employers before resigning. The notice period can vary depending on the terms of the contract but typically ranges from one to three months.
  2. Notice Contents: The resignation letter should clearly state the intent to resign, the last working day, and the reasons for resigning.
  3. Contractual Obligations: Employees are expected to fulfill their contractual obligations until the last working day specified in the resignation notice.
  4. Return of Company Property: Employees must return all company property, including uniforms, keys, and equipment, upon resignation.


What is the minimum notice period for resignation in the UAE?

  • The minimum notice period for resignation in the UAE varies depending on the employment contract. Generally, it ranges from one to three months. It’s essential to refer to the employment contract for specific notice period details.

Can employers terminate employees without cause in the UAE?

  • UAE labor law generally requires employers to have valid reasons, such as poor performance or misconduct, for termination. However, employers can terminate employees without cause under certain conditions, but they must provide notice or compensation in lieu of notice.

Are there any restrictions on the probationary period for new employees?

  • Yes, UAE labor law limits the probationary period to a maximum of six months. During this period, employees are entitled to all basic rights and benefits, including sick leave and annual leave.

What rights do employees have in case of workplace disputes or grievances?

  • Employees in the UAE have the right to file complaints or grievances with the Ministry of Human Resources and Emiratisation (MOHRE). The MOHRE can mediate disputes and help resolve labor-related issues.

Are there any restrictions on working overtime in the UAE?

  • Yes, employees in the UAE can work overtime, but it should not exceed two hours per day unless there is an urgent need. Overtime work should be compensated with additional pay, typically at a rate of 25% to 50% of the regular hourly wage, depending on the time of day and whether it’s a weekday or a holiday.

How long can a probationary period be in the UAE?

  • Probation periods in the UAE can vary, but they are typically capped at six months for most roles.

Can employees be asked to pay compensation if they resign before completing their contract term?

  • Employers may seek compensation if there is a breach of contract, but it depends on the circumstances and the contract terms.

What is end-of-service gratuity in the UAE?

  • End-of-service gratuity is a lump-sum payment provided to employees when they leave their jobs, typically calculated based on years of service.

How is gratuity calculated in the UAE?

  • The calculation depends on the type of contract (limited or unlimited) and the length of service, with different formulas for each.

Are there any exceptions to gratuity payments in the UAE?

  • In some cases, employees may not be eligible for gratuity, such as if they are terminated for gross misconduct.

Can employees face fees for resigning during their probation?

  • No, employees should not typically be charged for resigning during their probationary period in most employment situations.

How does an unlimited contract differ from a limited contract in the UAE?

  • The primary difference between a limited and an unlimited contract in the UAE lies in the duration of the employment relationship. A limited contract has a fixed term, while an unlimited contract does not have a specified end date and continues until terminated by either party with proper notice.

Do employees have to bear visa expenses upon resignation in the UAE?

  • In the UAE, whether employees have to bear visa expenses upon resignation depends on several factors, including the terms of their employment contract and the circumstances of their resignation. Here’s a general guideline:
  1. Limited Contract (Fixed-Term): If you are on a limited contract and you resign before the contract’s expiration, you may be required to cover some or all of the visa expenses. This can include cancelation fees and related costs.
  2. Unlimited Contract: If you are on an unlimited contract or if the employer initiates the termination, the employer is typically responsible for the visa costs associated with your resignation.

Read more about the legal obligation of employee abscond cases.

Can employers delay employee visa cancellation in UAE?

  • No, the employer cannot indefinitely delay the cancellation of an employee visa in the UAE. The cancellation process is governed by UAE labor laws and regulations, and it typically follows a specific procedure. Delays may occur due to legitimate reasons, but there are legal timeframes and processes that must be followed. If you believe your employer is unreasonably delaying the cancellation of your visa, you should seek legal advice or contact the relevant labor authorities in the UAE for assistance.

What is the time process for visa cancellation in the UAE?

  • The time process for visa cancellation in the UAE generally involves typically a range of 60 to 180 days, depending on the specific circumstances and authorities involved.
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