Under the UAE Labour law, unlimited term contract is defined as a contract which is having a specific start date but no end date. This type of contracts are more flexible than that of the limited term contract. They are flexible and user-friendly and most commonly used in the UAE. These types of contracts are made for those who are willing to work on a permanent basis.
The unlimited contract may terminate by an employer with the valid reason by giving 30 days prior notice to the employee. Under the articles 88 and 120 of the UAE labour law, an employer can terminate the contract. An employee may terminate the contract by giving 30 days prior notice to his employer.
The below-listed details are to be specified in an unlimited term contract:
- The date when it is concluded
- Starting date of the work
- The nature of the work
- The workplace
- Details of remuneration
Under this contract, an employee is entitled for gratuity. The condition to be entitled for end of service gratuity is that the employee should complete one year or more. The gratuity calculation is mentioned hereunder:
- For the first five years of service- 21 calendar days basic pay for each year.
- After five years of service- 30 calendar days basic salary for each year
If the employee resigns from the employment in an unlimited term contract then his end of service gratuity is calculated as follows:
- If employment service is between one to three years- 2/3rd reduction
- If the employment service is between three to five years- 1/3rd reduction
- If the employment service is more than five years- No reduction
An employee is not entitled to the end of service gratuity payment, if he has been terminated from the employment for the gross misconduct as mentioned in the UAE Labour Law.