There are two types of employment contracts in Dubai: limited-term contracts and unlimited-term contracts. Of course, there are a few differences between these two, like the treatment of statutory, termination consequences, gratuity entitlement and end of service. The Dubai labour contract is required to be written in both Arabic and English (within the UAE), mentioned by our accountants in Dubai. This is mandatory, especially in Dubai where the workforce is made of expatriates, so the English language is accepted for international business contracts. Now, although the employee will have two contracts, in two separate languages, if there are any discrepancies within the English one, the Arabic contract will prevail.
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Limited-term contracts in Dubai
Basically, a limited term contract is signed for a certain period and, most commonly, is directly linked to the duration of the residency visa in UAE (United Arab Emirates). This type of Dubai labor contract will end automatically at the specified date, unless early termination is involved or if the commitment is renewed by both parties. They are usually offered to employees who are needed for specific projects and the duration is known in advance. This contract type can be renewed, only with the consent of both parties and, at that point, can be turned into an unlimited contract. In the case of early termination, under the UAE labor law, the employee is entitled to a minimum of three months’ remuneration (allowances and salary included). On the other hand, if the worker wants to terminate the Dubai labor contract earlier than the discussed date, he/she is liable under the law, to pay half of three months’ early termination compensation to the employer.
Our audit company in Dubai can offer you the services you need for the company you own. With the help of the prepared financial reports, you can thus discover the financial position of the company, if profits and losses were correctly assessed. Also, with the help of audits, it is possible to discover if there are certain risks in the company and if they can be countered with the right measures.
Service gratuity calculator
First of all, an employee is entitled to end-of-service gratuity if he or she has completed a year or more of continuous service. The calculations are as follows:
- During the first five years of service, there is a basic pay of 21 calendar days;
- After the five years, it is offered 30 calendar days basic pay.
Unlimited contract in Dubai
The unlimited contract in Dubai is open-ended and can be terminated for various reasons (all under the UAE labor law). They are usually viewed as more flexible and, for this reason, they are more commonly used in the UAE. When it comes to ending such a contract, accounting firms in Dubai specify these two main ways:
- with a valid reason on notice,
- without notice, where no end of service gratuity is offered.
If the employee wants to terminate unlimited contract in Dubai, he or she has to provide the employer with a notice of a minimum of 30 calendar days or longer. As an alternative, the worker can end it without notice – specified under Article 121 of the Labor Law, in UAE. Same as for the limited term contracts, after one year of service, the employee is entitled to end of service gratuity: 21 calendar days for each year (in the first five years) and 30 calendar days after every additional year. Here are the minimum specifications for the two types of contracts – the limited term contract and the unlimited term contract.
The specifications for the limited-term contract:
- the date of its conclusion;
- the date on which work begins;
- the nature of the work;
- the workplace;
- the amount of the remuneration;
- the duration.
The specifications for the unlimited term contract:
- the date of its conclusion;
- the date on which work begins;
- the nature of the work;
- the workplace;
- the amount of the remuneration.
Part-time contracts in Dubai
There is the possibility to be employed with a part-time contract in Dubai and to have the same benefits stipulated by law (salary rights, rest leave, benefits, etc.). This means that the respective employee must comply with a certain number of working hours per week. What is important to emphasize is that this type of Dubai labor contract is also suitable for skilled workers in the UAE, but also for those who prove that they have been certified in the courses of a university or college for at least 2 years. And those who have knowledge and experience in the technical field can work under the rules of a part-time Dubai labor contract.
Moreover, you should know that this type of employment contract has a great advantage, that of having several jobs at the same time. In addition, if the employer agrees, he/she can change the part-time contract into a limited or unlimited one, but only after the end of the first commitment. You can discuss more information about this type of contract with our specialists.
Can a limited contract be renewed?
Dubai labor contract signed for a limited time can be renewed if the employer considers that the employee is essential in the company. However, the employee must also agree to the renewal of the contract, otherwise, he/she may express his option to terminate the collaboration with the company. Moreover, a limited-term employment contract in Dubai can turn into an unlimited one, being a decision of the employer.
Concluding the contract before the deadline
A Dubai short-term labor contract may be concluded before its expiration. What determines this situation is the decision of either the employer or the employee who decides that it is no longer necessary to cooperate. There are various reasons why such a contract may be concluded prematurely. Maybe the employer is no longer satisfied with that employee or maybe the latter does not feel satisfied from a financial and professional point of view. Whatever the reasons, it is important to know that a contract signed for a certain period can be concluded, respecting the laws in this regard. For more information on this topic, you can contact our specialists.
If you want outsourced accounting services, you can get in touch with our team of accountants in Dubai.
Short facts about offer letters in Dubai
Although the law does not oblige the employer, he has the opportunity to write offer letters for candidates who have successfully passed the interview test in a company. Such a letter is mostly formal and may include a description of the job within the company, responsibilities, salaries, and benefits, the right to rest leave, and other related details. Offer letters in Dubai are often the choice of companies that want to create a professional image not only in the market in which they operate but also in front of future employees.
What to pay attention to when signing an employment contract in Dubai
In some cases, the enthusiasm of a job opportunity and a Dubai labor contract can distract your attention.However,it is still advisable to analyze it before signing it. There are standard terms and conditions that you should check, and a contract that does not cover all aspects of your new job and rights may be denied. Therefore, information about the responsibilities at work, the framework in which you will carry out your activity, the type of contract (determined, indefinite, part-time, collaboration, etc.), remuneration, salary date, bonuses, contractual clauses regarding termination the collaboration must be found in detail in an employment contract in Dubai. It is important to mention that if a work contract that does not mention these important details can be refused, and then the employer will make the necessary changes and take into account what the law mentions in this regard.
How is a contract terminated in Dubai?
In the case of a limited contract, the termination is made if both parties agree in this sense, if the contract expires or if an employee commits something that is against the company’s regulations and against the Labor Law in the UAE. It is good to know that a Dubai labour contract and especially the limited one is available for two years, however, if one of the parties does not want to continue, a notice made in writing with at least one month needs to be made. This time, both employee and employer need to respect the agreements and the obligations involved.
As for unlimited contract in Dubai, the termination is made with a notice period, and if both parties mutually agree on closing the collaboration. It is important to know that each party can decide to close the collaboration and terminate a contract at any time, respecting the employment conditions in this matter, meaning that the obligations need to be considered: the employee will have to respect the notice period, while the employer will need to respect the payment conditions.
What is a termination without a notice?
Limited or unlimited employment contracts in Dubai can be closed without a notice period if an employer discovers that one of the employees used false identification documents, violated the internal rules in the company creating a substantial loss, failed to perform his/her duties in the firm and if:
- He/she has been found drunk at work or under the influence of drugs.
- He/she committed an assault on a colleague, manager, or any other employer.
- He/she divulged company secrets and plans to other companies.
- He/she did not respect the working hours for several days in a row without notifying the employer.
In the case of a contract termination without notice, the employee may act so and solicit closing the collaboration if the employee did not respect the contractual obligations like salary payment, security measures at work, and many others. Companies in Dubai can be easily established, nevertheless, if you would like to know what the accounting requirements are, you can solicit the support of our team of accountants in Dubai. Also, you may ask about the conditions of employment contracts and their applicability in Dubai. Companies in Dubai should ask for audits in Dubai and the ways in which we can provide support.
Regarding companies and businesses in the UAE, we present below some interesting statistics:
- The UAE Ministry of Economy announced that more than 652,000 business licenses were issued in June 2020. Of these, about 300,000 were registered in Dubai.
- According to data for 2019 and more precisely the period January – August, over 32,000 business permits were issued in the UAE.
- Most business licenses, about 71% of the total, were issued to those who wanted to set up companies in Dubai and Abu Dhabi.
What is arbitrary dismissal?
The arbitrary termination of a Dubai labour contract or collaboration is also named an unfair dismissal because it involves a specific situation where the employer decides on firing a worker without disclosing the reasons. This kind of termination of a work contract is totally legal and stipulated by the UAE Labor Law and particularly article 122. Even so, an employee found in this situation has rights and can file a complaint to the Ministry of Human Resources and Emiratisation where the authorities will have to find an amicable way to settle the case.
FAQ about Dubai labour contract
1. Is a contract required to be written in English and Arabic?
Yes, it is important to know that Arabic is the official language in the UAE, and therefore, your employment contract in Dubai needs to be written in this language. As it is known, there are many expats in Dubai and all contracts are translated into English.
2. What are the characteristics of limited and unlimited employment contracts?
The employment contract in Dubai signed for an unlimited period has no expiration date, except the cases in which the residence visa needs to be renewed. A 30 days notice needs to be made in the case of contract termination. In the case of limited employment contracts, these are signed over a specific period of time.
3. Is there a probationary period mentioned in a contract?
Yes, the probationary period cannot exceed 6 months, and it is the time in which the employer observes if the worker is suitable for the specific position in the company.
4. How is a contract terminated by an employee?
If you do not agree with the working conditions in the company, if you haven’t been paid for a certain period of time, if you have been assaulted at work, or if you simply do not agree with the terms and conditions at the place of work, you can decide on terminating the contract by mutual agreement.
5. Do I get an offer letter before I sign an employment contract in Dubai?
Yes, once the interview is done, and before a contract is signed, future employees may receive an offer letter comprising details about the job position, the duties, the working conditions, and the salary. Even though it is not mandatory, there are many companies that send offer letters.
It is important to know the details of an employment contract in Dubai offered by a company looking to hire staff. Feel free to address your inquiries to our team and find out complete information. If there are any other questions regarding the Dubai labour contract, audit firms in Dubai, or if there is a need for other accounting services in Dubai, do not hesitate to call us.