Learn about the unlimited contract resignation process in the UAE

Unlimited contract resignation in the UAE is allowed in the Labor Law according to various circumstances. In this way, the authorities ensure that the rights of employees and also those of employers are respected. Additionally, the laws establish the benefits to which the employee is entitled under these circumstances.

In this article, you will learn what an unlimited contract consists of and what are the valid reasons to terminate it. Likewise, we will show you the aspects that you should consider before and during resignation from your job. Let us see:

1. What is an unlimited contract UAE?
2. Valid reasons for terminating a contract
3. Do you know the conditions of unlimited contract resignation?
4. The end-of-service gratuity
5. Considerations before the unlimited contract resignation
6. Learn more about the unlimited contract termination process

1. What is an unlimited contract UAE?

In the United Arab Emirates, there are 2 types of contracts, limited-term contracts, and unlimited-term contracts. The unlimited contract type does not have an end date but both parties can terminate it at any time. However, the Labor Law determines the reasons for the unlimited contract resignation or the termination by the employer.

1.1 When is it common to establish an unlimited contract UAE?

Unlimited contracts have an advantage over limited contracts in that they are more flexible and easier to use. Therefore, it is more common for companies to offer their employees an unlimited contract than a limited one. In addition, it is useful if a company wants to permanently hire an employee and not for those who will carry out a limited project.

2. Valid reasons for terminating a contract

According to Federal Decree Law № 33 of 2021, there are specific situations for the termination of unlimited contract or limited contract. In this way, article 42 of the Regulation of Labor Relations in the Private Sector establishes said situations. Thus, a contract can be terminated according to the following:

• Due to the expiration of the contract and its non-extension or renewal.
• By mutual agreement between the company and the worker.
• When any of the parties wants to terminate the contract and that they observe the established. provisions and comply with the notice period.
• If the employer dies and the object of the contract is related to its entity.
• Due to death or total permanent disability of the employee, based on a valid medical certificate.
• If the worker must face a judicial sentence that restricts his freedom for less than 3 months.
• Due to the permanent closure of the business due to UAE legislation.
• For the interruption of the project due to bankruptcy, insolvency, economic reasons, or exceptional ones.
• If the employee fails to comply with the conditions for renewing their work permit or visa for reasons beyond the control of the employer.

3. Do you know the conditions of unlimited contract resignation?

According to article 117 of the UAE Labor Law, an employee can resign from a contract by mutual agreement. However, the worker must comply with the notice period of unlimited contract, which consists of 30 business days. However, articles 121 and 45 of the Labor Law establish that the employee can resign without prior notice under certain conditions.

• The employer does not fulfill its contractual or legal obligations to the employee. In this case, the worker must notify MOHRE about the circumstances 2 weeks before the resignation. Then, if the employer does not correct the situation despite the notification from the ministry, the employee may resign.
• The employer or some representative of the company assaulted or harassed the worker. The employee must inform the authorities of the situation within 5 working days from the date of the problem. Thus, the employee must file the complaint with the competent authorities and with the Ministry of Health and Prevention.
• When, without the consent of the worker, the company assigns him a job other than that established in the employment contract. However, if the assignment is necessary according to article 12 of the Labor Law, there is no reason for the unlimited contract resignation.
• The company did not eliminate the risk factors, safety threats, or risks to the health of the workers with full knowledge. These risks are detailed in article 26 of Cabinet Resolution No. 1 of 2022.

3.1 Can I resign after 6 months in an unlimited contract UAE 2023 

To answer to this, Yes one can resign in an unlimited contract UAE anytime after completion of 6 months in UAE 2023.

4. The end-of-service gratuity

An employee may receive the end-of-service gratuity for unlimited contract termination by resignation or termination of employment. In this way, when the employee resigns under an unlimited contract, article 137 of the Labor Law establishes said bonus. Thus, according to the aforementioned article, the employee has the right to the following:

• Employees who have worked in the company for less than 1 year are not entitled to end-of-service pay.
• Employees who have completed between 1 and 3 years of service, must receive 1/3 of 21 days of salary.
• For employees who have completed between 3 and 5 years of service, the payment is 2/3 of 21 days of salary.
• Employees who have worked for more than 5 years in the company must receive 21 days of full salary.

5. Considerations before the unlimited contract resignation

Before resigning from your job in the UAE, there are some details that you should take into account to avoid legal problems. Also, regardless of the reason for leaving, these tips help leave on good terms. Therefore, we offer you the following tips:

5.1 Review your contract

Before starting the UAE termination of unlimited contract process, be sure to review it completely. In this way, you will obtain all the information about the terms and conditions that govern your relationship with your employer. This way, you will know what the contract says regarding the notice period, the end of service payment, or the termination by mutual agreement.

Moreover, you will be able to find out if there is any clause that prevents you from working with the rival company. You will also be able to learn about the proper procedure to present the resignation to the company.

5.2 You do not need the permission of your employer

The resignation process depends wholly on you since the law establishes that you do not need the consent of the company. Also, the employer cannot force you to quit your job under any conditions. However, if you need to comply with the requirements of the law and inform the decision in time.

5.3 Comply with the notice period

As we said, the notice period for resignation under the unlimited contract UAE is 30 days. However, while the earlier time is common and legal, your labour contract may specify another period. Therefore, you must comply with this period or pay compensation to the employer if you want to leave the job immediately.

This will allow you to comply with legal requirements and avoid problem with your employer or the authorities. Also, if you do not comply with the notice period, you may receive a ban from working in the UAE. The time of this prohibition can be up to 1 whole year.

5.4 Calculate the end-of-service gratuity for resigning

The end-of-service gratuity calculation is based on the basic salary you have lately received at the company. In addition, the payment of this benefit under an unlimited contract is not the same as when it is under a limited contract. This way, you can avoid any mistakes that lead to a confusion and having to go to the authorities.

5.5 Write a formal letter of resignation

Formalize your resignation through a letter, which you can deliver directly or by sending an email to your employer. However, many companies require a paper letter to keep a physical record of the resignation of the worker. Also, be sure to include all the details of the resignation such as the reason and the date of execution.

5.6 Be ready to negotiate

An employer may want to keep you at your job, so they will want to negotiate with you. For example, it will be able to offer you a salary increase, a better position, an increase in your benefits, and more. Thus, if you want to continue working with the company, you should consider the offer and prepare to negotiate.

Also, if you decide to accept the new terms and conditions, make sure the employer puts them in writing and executes them. However, if you are determined to leave the company, stick to your position in a professional manner.

5.7 Resign on good terms

At the end of the entire process, you must manage to leave the business on the best possible terms, regardless of the reason for the resignation. Thus, follow the advice we have given you, including informing you in writing, adhering to the trial period, and staying professional. This way, you can even get a good recommendation for reference in your future jobs in the United Arab Emirates.

6. Learn more about the unlimited contract termination process

The UAE Labor Law allows unlimited contract resignation for various reasons, as well as the notice period. Likewise, it establishes the rights that the employee has to receive an end-of-service bonus in this and other cases. Hence, if you plan to quit your job, you should consider these and the other aspects that we have mentioned.

Therefore, if you want information or legal advice regarding employment contracts in the UAE, contact us. You can find out about our services and obtain advice by calling us at +971 43 316 688 or by writing to [email protected].

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