The United Arab Emirates (UAE) has a unique employment dynamics, with its labor laws governing the rights and obligations of employers and employees. Are you wondering if you can resign within 6 months of unlimited contract? Then we have got you covered. In this blog, we will comprehend the specifics of resigning after 6 months in an unlimited contract in the UAE. We will also explore the legal requirements and implications for both parties involved. So, keep reading to know more.
Before that, let’s understand what exactly an unlimited contract in the UAE is.
What is an Unlimited Contract in the UAE?
An unlimited contract in the UAE is one that starts on a specified date but has no fixed date for expiry. This sort of contract is generally recognized to be less rigid and favorable to the employee, who can have a clear level of job security and the possibility of career advancement.
According to an unlimited contract, it is valid from the time it is made until the time it is terminated by either party, which may be terminated at any time, provided that proper notification has been provided and the intention to terminate the contract has been mutually agreed upon.
Features of Unlimited Contracts in the UAE
No Fixed End Date: While limited contract is therefore characterized by a set end time, the unlimited contracts are marked by the absence of a set end time. What this implies is that the employment relationship may last as long as each of the parties so desires it to do so or as may be cut short by any of the parties.
Flexibility: While the conceptual characteristics of telework are a carrier for understanding the possibilities of working from a distance, there are definite advantages of granting unlimited contracts. The employees can also search for another employer to be assigned to a different workplace without having to wait for a termination of the contract while employers can change certain conditions of employment such as wages and other remunerations upon consultation with the employee.
Job Security: There is also the fact that employees under the unlimited contracts are, to some extent, shielded from dismissal without having some reasoning for it. The employer can allow to stay as long as they wanted to stay but the worker should not violate the agreement signed between them and the employer.
End-of-Service Gratuity: If termination occurs, employees are free to receive ‘end-of-service gratuity pay’ which rates depend on the duration of work done.
Termination: Standard notice period of thirty days applies where one party is able to terminate an unlimited contract. In the case that the termination is fair through mutual consensus between the employer and the employee, the former must also give the latter monetary compensation equivalent to 30 days’ worth of salary.
Comparison with Limited Contracts
Limited contracts refer to those employment contracts where the parties agree that the contract shall come into force at a given time and last for a specific period. They are most normally associated with the UAE residency visa period of the said individual, not exceeding four years. The advantages of limited contracts include the fact that they can be used in those cases where a contracts run for a specific term or for employees who want to be under a limited contract rather than an open one.
Can I Resign After 6 Months in an Unlimited Contract?
Yes, you can resign after 6 months in an unlimited contract in the UAE. There is no restriction on resigning based on how long you have been in the role under an unlimited contract. This means that employees can decide when to resign, regardless of the duration of their employment.
Notice Period
To resign from an unlimited contract, you must provide a notice period. The notice period typically ranges from a minimum of 30 calendar days to a maximum of three months. This ensures a smooth transition and allows the employer to make necessary arrangements.
End-of-Service Gratuity
When resigning from an unlimited contract, you are entitled to end-of-service gratuity based on your length of service. The gratuity is calculated as follows:
Service less than 5 years: 1/3rd of 21-day gratuity pay for each year served
Service 5 years or more: Full 30-day gratuity pay for each year served
Termination
Either party can terminate an unlimited contract with a notice period. If the termination is based on mutual agreement, the employer must provide compensation equal to 30 days’ worth of salary.
Factors to Consider Before Resigning
Here are the key factors to consider before resigning from an unlimited contract in the UAE:
Notice Period
Employees must provide a notice period before resigning, typically ranging from 30 calendar days to a maximum of 3 months.
The exact notice period should be specified in the employment contract. Failing to provide the required notice can lead to penalties.
End-of-Service Gratuity
Employees who have completed at least 1 year of continuous service are entitled to end-of-service gratuity upon resignation.
The gratuity is calculated based on the employee’s length of service and final basic salary.
For service less than 5 years, it’s 1/3 of 21 days’ salary per year. For 5+ years, it’s 21 days’ salary per year.
Non-Compete Agreements
Review the contract for any non-compete clauses that restrict working for competitors after resignation.
Ensure compliance with these clauses to avoid potential legal issues.
Resignation Letter
Formally resign by submitting a letter to the employer, either directly or via email.
Include details like the reason for resignation and effective date.
Compensation for Early Termination
There is no compensation owed for early termination when resigning from an unlimited contract.
However, failing to provide the required notice period may require paying compensation to the employer.
Potential Labor Ban
Resigning without providing the notice period can lead to a labor ban, preventing work in the UAE for up to 1 year.
By considering these factors and following the proper resignation process, employees can resign from an unlimited contract in the UAE while avoiding potential legal issues or penalties. It’s crucial to review the contract terms and adhere to the notice period requirements.
Alternatives of Resignation:
Negotiate a Better Schedule
Ask your employer for a more flexible schedule, such as fewer hours to pursue other interests or more hours to take advantage of opportunities from others quitting.
Propose working remotely if that would improve your work-life balance.
Ask for a Promotion or Raise
If you’re taking on extra responsibilities due to others quitting, discuss a promotion or raise to reflect your expanded role. Leverage the current job market where employers are desperate for workers to negotiate better compensation.
Negotiate Additional Perks
Request perks like improved insurance benefits, more sick/vacation days, or bonuses in exchange for staying. Businesses may be willing to offer better benefits to retain employees during the “Great Resignation”.
Take a Break
If you’re feeling burnt out, consider taking some leave or a short break before deciding to quit.
Spend time resting and reassessing your situation before making a big decision.
Ask for Help with Workload
If an unreasonable workload is driving you to quit, speak to your manager about getting assistance.
Managers may not realize the extent of your workload unless you communicate it to them.
Pursue Professional Development
Seek out training, conferences or courses to gain new skills and reinvigorate your passion for the work.
Discuss with your employer if they can provide funding for professional development opportunities.
Start a Side Hustle
Pursue a side project or business that aligns with your true calling and provides fulfillment.
Having an outlet for your passions outside of work can make your job more tolerable.
By exploring these alternatives, you may be able to find ways to stay in your current role while still getting your needs met. However, if the situation is truly untenable, resigning may be the best option.
Legal Process of Resignation:
- Employees can resign from an unlimited contract at any time, regardless of how long they have been employed.
- To resign, the employee must provide a notice period, typically ranging from a minimum of 30 calendar days to a maximum of 3 months. The exact notice period should be specified in the employment contract.
- Failing to provide the required notice period can lead to penalties and potentially a labor ban preventing work in the UAE for up to 1 year.
- Employees are entitled to end-of-service gratuity upon resignation if they have completed at least 1 year of continuous service.
- For service less than 5 years, the gratuity is 1/3 of 21 days’ salary per year
- For 5+ years, it’s 21 days’ salary per year
- The gratuity is capped at 2 years’ salary total
- The employee should submit a formal resignation letter to the employer, either directly or via email, stating the intention to resign and the effective date.
- Review the contract for any non-compete clauses that restrict working for competitors after resignation.
- There is no compensation owed for early termination when resigning from an unlimited contract. However, failing to provide the required notice may require paying compensation to the employer.
By following this process and adhering to the notice period, employees can resign from an unlimited contract in the UAE while avoiding potential legal issues or penalties. The key is to review the contract terms and provide proper notice.
Conclusion
In conclusion, resigning after 6 months in an unlimited contract in the UAE is a legal and straightforward process. Employees must provide a notice period and are entitled to end-of-service gratuity based on their length of service. They should also adhere to the notice period and provide compensation if the termination is based on mutual agreement. For expert legal advice on employment contracts and labor laws in the UAE, always reach out to professional help to avoid any issues.
FAQs
What is an unlimited contract in the UAE?
An unlimited contract is an open-ended employment contract with no fixed end date.
Can I resign from an unlimited contract in the UAE?
Yes, employees can resign from an unlimited contract at any time.
How much notice period is required to resign from an unlimited contract?
The notice period typically ranges from 30 calendar days to 3 months, as specified in the employment contract.
What happens if I don’t provide the required notice period when resigning?
Failing to provide the notice period can lead to penalties and potentially a labor ban preventing work in the UAE for up to 1 year.
Am I entitled to end-of-service gratuity when resigning from an unlimited contract?
Yes, if you have completed at least 1 year of continuous service, you are entitled to end-of-service gratuity upon resignation.
How is end-of-service gratuity calculated for unlimited contracts?
For service less than 5 years, it’s 1/3 of 21 days’ salary per year. For 5+ years, it’s 21 days’ salary per year.
Is there any compensation for early termination when resigning from an unlimited contract?
No, there is no compensation owed for early termination when resigning from an unlimited contract.
Can my employer terminate my unlimited contract?
Yes, employers can terminate unlimited contracts for various reasons under the UAE Labor Law, including serious misconduct, poor performance, or mutual agreement.
What are the employer’s obligations when terminating an unlimited contract?
Employers must provide a notice period before termination and pay end-of-service gratuity to eligible employees.
Are there any restrictions on working for competitors after resigning from an unlimited contract?
Review the contract for any non-compete clauses that restrict working for competitors after resignation.