The unlimited employment contract is by its very nature more flexible and currently parties are permitted to terminate the employment contract subject to each party giving notice. The major amendment in respect of unlimited contracts is the capped duration of notice at 3 months. It is a common feature in the UAE to have senior executives and teachers constrained to 6 months notice. The Decrees are intended to create a mechanism in which all employees are free to leave soon after notice is submitted. This may call for employers to think of other mechanisms of retaining staff, such as long term incentive plans that vest periodically, or deferred bonus schemes.

1. (A) The UAE Ministerial decree 766 of 2015 – Issuing of new work permits

(Unlimited contract)

New visas will be granted (i.e. no labour ban) to employees who were employed on an unlimited contract where:

• There is mutual consent between the parties provided six months has been served.  The six month service is not required for employees with high school certificate or higher qualifications.

• One party gives at least 30 days notice(1 and 3 months), honours contractual notice and has six months service. The six month service is not required for employees with high school certificate or higher qualifications.
• The employer terminates the employee for no fault of the employee, again provided six months service. No length of service for employees with high school certificate and above.

• The employer has failed to meet their contractual obligations such as non-payment of wages for 60 days.
• The Employer ceases to operate.
• An employee has obtained a Court Judgment against their employer for:

• unpaid wages;
• arbitrary termination or early termination compensation;
• any other rights that the employer has failed to grant the employee such as dues in respect of end-of service gratuity.

1. (B) The UAE Ministerial decree 766 of 2015 –– Issuing a new work permit

(Limited contract)

New visas will be granted (i.e. no labour ban) to employees who were employed on a limited contract where:

• The fixed term has expired and not renewed.
•  There is mutual consent between the parties provided six months has been served.  The six months service is not required for employees with high school certificate or higher qualifications.

•  One party gives at least 30 days notice, honours notice and pays agreed compensation. Compensation of no more than three months’ gross wages.

– By Thenji Macanda, Senior Associate at Taylor Wessing (Middle East) LLP

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