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Resignation Laws under Limited Contract UAE

Meta Description: Discover all you need to know about resignation laws under a limited contract in the UAE, including notice periods, penalties, legal rights, and steps to ensure a smooth transition

Introduction:

Working in the UAE makes it essential for you to understand federal and local laws as their employment contracts are based on these laws. Limited contracts spell out the terms of your employment, including how long you’ll be working and the conditions for ending your job early. So many people inquire Do I need to pay if I resign from a limited contract?

Resigning under such a contract can be tricky because there might be specific rules about what you owe your employer if you decide to leave before the contract ends. This can vary depending on where you work and the exact terms of your agreement.

In this guide, we’ll break down the legal process of resigning under a limited contract, helping you understand your rights and responsibilities. Whether you’re looking to make a smooth exit or just want to understand your options, we’ve got you covered with the essentials you need to know.

What is a Limited Contract?

In the UAE, a limited contract is a type of employment agreement that has a fixed term. It usually ranges from one to three years. This contract clearly states the start and end dates of your employment. Essentially, it’s an agreement to work for a specific period, and both you and your employer are expected to honor this timeline.

What to expect from a limited contract

Fixed Duration: Unlike unlimited contracts, which are open-ended, limited contracts are time-bound. Once the term ends, the contract is either renewed or it simply expires.

Termination Clauses: These contracts have specific terms for early termination. Both parties need to adhere to these clauses if either of you decides to end the contract before the specified period.

Renewal: At the end of the contract term, your employer may offer to renew it. This can be a new limited contract or a switch to an unlimited contract, depending on your agreement.

What is Resignation under a Limited Contract?

Resignation under a limited contract refers to an employee’s decision to leave their job before the end of the contract term, despite the predefined period stipulated in the employment agreement. Here’s what it involves:

Contractual Agreement:

A limited contract is a fixed-term agreement that specifies the duration of employment, typically between one to three years. Both parties agree to uphold the terms for the duration specified unless certain conditions allow for early termination.

Employee-Initiated Termination:

When an employee resigns under a limited contract, they are effectively ending the contract early. This is different from the contract naturally expiring at the end of its term or being renewed.

If employee resigns during probation period, without mentioning any valid reason then employee may have to compensate the employer with some amount or at the cost of his employment visa.

Therefore it is necessary to read the contract terms carefully if any compensation needs to be made in case of employee initiated termination.

Reasons for Resignation:

Employees may choose to resign for various reasons, including better job opportunities, personal reasons, dissatisfaction with the current job, or issues with the employer.

Implications of Resignation:

Unlike an open-ended contract, where resignations are typically governed by a standard notice period, resigning under a limited contract often involves specific financial consequences. The employee might owe compensation to the employer as per the terms outlined in the contract and the UAE Labor Law.

What Happens If I Resign Under a Limited Contract?

Resigning under a limited contract in the UAE can be a bit more complicated than resigning under an unlimited contract. If you decide to resign before your limited contract term ends, you must be aware of the following terms to avoid any issues and problems.

Notice Period:

Even though you’re under a limited contract, you usually need to give your employer a notice period if you want to resign. In this case, you would not have to pay anything to the employer. This notice period should be specified in your contract that could be somewhere between one to three months. Failing to provide proper notice can lead to additional penalties.

Job Hunting during Notice Period

According to article 43(5), in case of employer initiated termination, the employee has the right to search for job during the notice period.

Leaving job without Notice Period

As per article 45, an employee can leave the job without notice period if employer fails to fulfill the terms mentioned in the contract or assault the employee.

Resignation Penalties:

Compensation to Employer: If you resign before the contract term ends, you might be required to compensate your employer. This compensation is often equivalent to your salary for 45 days or the remaining period of the contract, whichever is shorter. The exact amount can vary based on your contract terms.

Reimbursement of Costs: In some cases, employers may ask for reimbursement of costs related to your hiring, such as visa fees or relocation expenses. This should also be outlined in your contract.

End-of-Service Benefits:

If you resign before completing one year of service, you typically aren’t entitled to any end-of-service gratuity. However, if you’ve completed at least one year, you may be entitled to a reduced gratuity based on the length of your service.

Legal Grounds for Termination:

There are specific conditions under UAE labor law where you can resign without penalty. For instance, if your employer breaches the contract terms, fails to pay your wages, or creates an unsafe working environment, you may be able to resign without facing financial penalties. It’s essential to document such issues and seek legal advice.

Resignation laws for employees of Government sector:

If an employee of Government sector wants to resign, he/she can seek help from article 80-81 that is defined in the Abu Dhabi Human Resources Law No. 6 of 2016.

Look at the following points

  • Write a formal resignation and submit in the company
  • HR department has a month to respond, during that time you will keep working like before
  • If they respond and accept the resignation, you can leave and return any work related items you were given by the company.
  • In case, they do not respond you are obliged to work in that company for next two months and during that period, you are supposed to return work related items given to you.

Resignation laws for employees of Private sector:

If you are thinking of resigning from a private company, you must understand the Federal decree no. 33

  • In limited contract, the first and last date is mentioned so on the last day, the contract automatically ends in case of on extension from both the parties.
  • But if you want to resign, you should submit a valid reason in written form
  • You must provide a notice period of 30 days if it’s a crucial time for the organization
  • During the notice period, you will get your salary and all other benefits from the company.

Conclusion:

In conclusion, resigning under a limited contract in the UAE requires careful consideration of several key factors to ensure a smooth transition and avoid unnecessary penalties. Always review your limited contract thoroughly to understand the terms regarding resignation, notice periods, and potential financial obligations. If you are uncertain about your rights or obligations, consulting with a labor lawyer or legal expert in the UAE can provide valuable clarity and guidance. Additionally, if you are resigning due to employer misconduct or unsafe working conditions, meticulously document all relevant details, as this can be crucial if you need to contest any penalties or seek legal recourse. By taking these steps, you can navigate the resignation process more confidently and protect your financial and legal interests.

 Q: What is a limited contract in the UAE?

A: A limited contract is a fixed-term employment agreement specifying the duration of employment, usually between one to three years.

 Q: Do I need to pay a penalty if I resign before my limited contract ends?

A: Yes, typically you may need to compensate your employer, often equivalent to half of your wages for three months or the remaining period of the contract, whichever is shorter.

Q: What happens if I don’t give notice before resigning?

A: Failing to provide the required notice period, as stipulated in your contract, can result in additional penalties.

Q: Are there any exceptions where I don’t have to pay a penalty for resigning?

A: Yes, if you resign due to employer misconduct, unpaid wages, or unsafe working conditions, you may not have to pay penalties. Ensure to document these issues thoroughly.

 Q: Am I entitled to end-of-service benefits if I resign under a limited contract?

A: You may be entitled to end-of-service gratuity if you’ve completed more than one year of service, though the amount may be reduced if you resign before the contract term ends.

Q: Can my employer ask for reimbursement of recruitment and visa costs?

A: Yes, some contracts may require you to reimburse certain costs like visa and recruitment fees if you resign early.

 Q: What should I do if I’m unsure about the resignation process?

A: Consult with a labor lawyer or legal expert in the UAE to understand your rights and obligations clearly.

Q: Can I legally contest a penalty if I resign under a limited contract?

A: Yes, you can contest a penalty if you have valid reasons for resigning, such as employer misconduct. Proper documentation and legal advice are crucial.

Q: How can I ensure a smooth resignation process under a limited contract?

A: Review your contract, understand your notice period and potential penalties, seek legal advice if needed, and document any issues related to employer misconduct or unsafe conditions.

 Q: What is the first step I should take if I decide to resign under a limited contract?

A: The first step is to review your employment contract thoroughly to understand the terms and any financial implications of resigning before the contract ends.