Rules of limited contracts

I would like to know about the rules governing such a contract with reference to termination by both employee and employer, especially with regards to the ban.

  • Compiled by Dina Aboul Hosn
  • Published: 00:38 May 16, 2008
  • Gulf News

A reader in Dubai asks: I have been offered a limited period contract for five years by a prospective employer. I would like to know about the rules governing such a contract with reference to termination by both employee and employer, especially with regards to the ban.

I would like to clarify to the questioner that Article 38 of UAE Labour Law provides that a contract of employment may be for a limited or unlimited period. According to the text of this article, the employer and employee are free to choose the type of employment contract. If the contract of employment is for a limited period, this shall not exceed four years and the contract may be renewed by mutual agreement between the parties for a similar or a shorter period. According to Article 115 of this law: "If the employer revokes this contract for reasons other than those specified in Article 120, he shall be required to compensate the worker for any prejudice the latter sustains, provided that the amount of compensation shall in no case exceed the aggregate remuneration due for three months or the residual period of the contract whichever is shorter unless the contract contains a provision to the contrary."

Article 116 of the same law states the following: "Where a contract is revoked by the worker for reasons other than those specified in Article 121, he shall be required to compensate the employer for any prejudice the latter sustains as a result: provided that the amount of compensation shall not exceed half the worker's remuneration for three months or the residual period of the contract whichever is shorter unless the contract contains a provision to the contrary." The employer may also ask the Ministry of Labour to impose a one-year ban on the worker, and the Ministry of Labour may respond to the employer's request, especially if it has been proven that the employer did not breach his obligations.

Questions answered by Advocate Mohammad Ebrahim Al Shaiba of Al Bahar Advocates and Legal Consultants

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