Can I Resign After 6 Months In Limited Contract In UAE

After recent updates in the UAE Labour Law, many employees are asking: Can I resign after 6 months in a limited contract UAE? The answer is yes, You can officially resign from a limited contract after 6 months as per UAE Federal Decree-Law No. 33/2021 provided you meet all necessary obligations and requirements.

Unfortunately, many people rush this process and are forced to forfeit their benefits. In this article, we’ll go over all the technicalities and nuances for your peace of mind.

Let’s begin:

What Is A Limited Contract In The UAE?

A limited contract in the UAE is a fixed-term employment agreement with a maximum duration of 3 years. It follows a clearly defined start and end date. Your employer can also extend a limited contract upon mutual agreement.

Before 2022, all private companies in the UAE were allowed to hire employees under both limited and unlimited contracts. This ruling was later discontinued with the Federal Decree-Law No. 14/2022.

However, this newer law also permits employees under a limited contract to resign after 6 months. You must give at least a 30 days notice to your firm and meet all legal obligations to receive end-of-service benefits.

What Are The Legal Requirements For Terminating An Employment Contract?

If you’re planning to resign from a limited contract, there’s a proper legal process to be followed and compliance with the UAE Labour Law is a must. The requirements are somewhat similar with both private or government sectors jobs, including:

Submitting a formal resignation letter.
Reaching mutual agreement with your employer.
Serving a notice period ranging from 30 to 90 days.
Completing any pending tasks and settling outstanding dues.
Complying with any penalty/forfeiture clauses in the case of early resignation.

Fulfilling your obligations as an employer in the UAE not only grants you end-of-service benefits, but also prevents disputes and potential legal consequences. You can find a more detailed checklist on the resignation law for both government and private employees below:

Resignation Law For Limited Contract In Government Sector

The rules for resigning on a limited contract as a government employee in the UAE is mentioned under Articles 80–81 of Abu Dhabi Human Resources Law No. 6 of 2016. Here’s a more structured checklist for your convenience:

Prepare a resignation letter: Create a formal resignation letter addressed to the HR of your department. This letter should clearly state your intent to resign.
Wait for an official response: Your resignation has to be legally accepted within 30 days from the date of submission. If no response is received within that period, your resignation is automatically deemed accepted.
Continue serving notice period: During the 30-day waiting period, you are expected to continue performing your duties as normal.
Handover period: Government sector employees might need to serve a handover period after their resignation is accepted. This can last up to 2 months, during which they must deliver all items, documents, and any government property in their custody.
Receive remuneration: Throughout the handover period, every government employee receives full salary as a bonus.

Have a look At: JAFZA Gratuity Rules

Resignation Law For Limited Contract In The Private Sector

For private sector employees, the rules for resignations are mentioned in the Federal Decree No. 33 of 2021. Here’s the checklist and guidelines on how to process your exit while meeting all legal obligations:

Review your contract: Confirm your notice period (typically 30 to 90 days) and any early termination clauses or penalties.
Write a resignation letter: Clearly state your intent to resign and include your effective resignation date in line with your contractual notice period.
Serve notice period: Submit your resignation in advance and continue working during the notice period to avoid compensation liabilities.
Complete the handover process: Once the resignation is accepted, prepare a detailed handover of your responsibilities and return all company property as required.
Settle outstanding dues: Clear any pending tasks or financial dues that may be stipulated in your contract.
Obtain written acknowledgment: Request a formal confirmation or No-Objection Certificate (NOC) from your employer regarding your resignation.
Final settlement: Follow up on your final settlement so you can receive any accrued benefits, unused leave payouts, and the appropriate end-of-service gratuity.

Legal Procedure For Resignation In Limited Contract In UAE

It’s crucial to execute a resignation from a limited contract in the UAE by following proper legal guidelines and regulations to avoid future issues. Here is a step-by-step process for ending a limited contract as an employee according to the UAE Labour Law:

Review Contract Terms and Minimum Service Period: Before initiating your resignation, thoroughly review your contract. Look for the required notice period (commonly 30 to 90 days), any clauses regarding early termination penalties as stated by your firm, and whether you’ve completed the minimum service period of 6 months as it may affect your eligibility to resign without penalty.
Prepare a resignation letter: Create a formal written resignation letter that highlights your intention to resign from the limited contract with an effective date that aligns with your notice period.
Serve your notice period: After submitting your resignation, continue to perform your job duties during the notice period. Failure to do so without probable cause can lead to penalties and fines in accordance with Article 43 (3) of the UAE Labour Law.
Finish the handover process: Return any company property, documents, and get clearances from relevant departments during your handover period.
Final settlement: Keep copies of your resignation letter, any acknowledgment or clearance certificates, and confirm the details of your final settlement—including unused leave and any end-of-service gratuity.
Contract expiry or renewal: A limited contract ends automatically on its specified end date unless it is renewed or extended. Mutual agreement is required for any early termination or contract extension.

Legal Processes for Discontinuation of the Limited Contract

When a limited contract reaches its end date and neither of the parties agrees on a renewal, it is automatically discontinued. This natural expiration is built into the contract’s terms, meaning that once the fixed period is over, the employment relationship ceases by operation of law.

Even though the contract ends automatically, it helps to become familiar with the process so the rights and legal obligations of both parties are fulfilled:

Automatic Expiry: The contract terminates on the specified end date without the need for a resignation or termination process.
Handover Procedures: The employer should arrange for a proper handover, so that all duties are transferred and company property is returned.
Final Settlement: The employee must be paid a final settlement, which includes leftover leaves and any end-of-service benefits such as gratuity.
Documentation: The employer must document the natural discontinuation and provide necessary certificates (e.g., an experience certificate) to the employee.
Renewal Option: If both parties wish to continue the employment relationship, they can negotiate a renewal or extension before the contract’s expiration.

Can You Resign After 6 Months?

Yes, it is legally permissible for all employees in the UAE to resign after 6 months from a limited contract. In certain scenarios outlined in Article 45 of the Federal Decree by Law No. (33) of 2021, you may even be legally eligible to resign without serving a notice period.For any reason not exempted from Article 45, it’s a legal obligation for you to serve a notice period of 1 to 3 months according to your mutual understanding.

What Compensation Can You Expect When a Limited Contract is Terminated?

Every employee who is terminated from a limited contract in the UAE without cause is eligible to receive some form of compensation.Typically, this compensation is capped at three months’ gross wages, which includes both your basic salary and any gratuity pay. The final amount is determined by comparing two calculations and choosing the lower value:

Remaining Salary Calculation: This is the salary amount you could have earned from the termination date till the end of contract.
Three Months’ Gross Wages: This includes your basic salary plus any additional benefits as defined in your contract.

This is the standard procedure for calculating compensation unless a specific figure is mentioned in your contract. It’s also important to note that your final settlement might include your end-of-service gratuity. As per Article 51 of the Labour Law, the criteria for calculating gratuity is as follows:

Less Than 5 Years: You receive 21 days’ of wage for each year of service under the company
More Than 5 Years: You receive 30 days’ of wage for every additional year of service over the settlement for the first 5 years.
Overall Cap: The total severance pay cannot exceed the equivalent of two full years’ wages.

When Does a Limited Contract End in the UAE?

As per standard practice, your limited contract stays valid until it reaches its expiry date as mentioned on the agreement. These contracts can also end due to reasons like:

It reaches the predetermined end date and expires naturally.
The employer decides not to extend or renew the contract after its expiry
Both parties decide to mutually end the contract earlier.

Even though the contract is limited by nature, employees still retain the right to resign with prior notice, unless their departure is due to a violation of UAE Labor Laws by the employer.

What Would Happen If Your Limited Contract Is Terminated Without Prior Notice?

Every employer in the UAE has legal power to end a limited contract prematurely without prior notice if the worker is found guilty of serious misdemeanour under Article 120 of the UAE Labour Law. In such cases, the employer isn’t obligated to compensate employees for the notice period, although other final settlements (like accrued benefits) may still apply.

Here is a list of violations that can get you terminated from a limited contract in the UAE:

Document Forgery: If the employee submits forged or false documents.
Financial Loss: Causing significant monetary loss or damage to the employer.
Safety Violations: Endangering the workplace by ignoring orders or protocols.
Failure to Perform: Not fulfilling basic job duties despite formal warnings.
Breach of Confidentiality: Disclosing sensitive company information.
Physical Misconduct: Engaging in assault or violent behavior at work.
Intoxication: Being under the influence of drugs or alcohol while on duty.
Absconding: Unauthorized prolonged absence from work without a valid excuse.

If your employer has legal justifications to terminate you for any of the above reasons, your right to a notice period is automatically forfeited. If termination without notice occurs, the employee’s right to a notice period is forfeited. However, they still have protections, such as the entitlement to any accrued leave, end-of-service benefits, and the right to challenge an unfair dismissal through legal channels.

What happens if I resign from a limited contract in the UAE without any reason before the end date?

If you resign from a limited contract without a valid cause before the end of its term, you may face legal and financial penalties. Under UAE Labour Law, early resignation without a justified reason can trigger compensation obligations that are designed to cover the loss of income for the employer.

This means you might have to pay a penalty, which is often calculated based on the remaining notice period or other contractual provisions. Here are some key points to consider:

Compensation Penalties: If you failed to serve the notice period, you may be required to pay the employer an amount equivalent to the notice period salary. Some contracts include specific penalty clauses for early termination without valid causes.
Impact on End-of-Service Benefits: Your end-of-service gratuity or other accrued benefits might be reduced or forfeited if you leave before the contract’s term is completed.
Future Employment Implications: An early, unjustified resignation can appear poorly on your employment record, potentially affecting your reputation and future work visa applications in the UAE.

To mitigate any unnecessary financial and legal risks, we recommend consulting a legal expert before making this decision. They may help you avert possible consequences and establish grounds for reasonable negotiations to minimize penalties.

Conclusion

Every employee (both foreign and domestic) has the legal right to resign from a limited contract in the UAE. However, it always helps to become familiar and follow the proper legal process to make it fair to both parties. If you’re confused, don’t be afraid to seek advice from a lawyer, and always be familiar with any end-of-service benefits you’re entitled to. Below, we have answered some of the most commonly asked questions about limited contract resignation in the UAE for your clarity and safety.

FAQs about limited contract resignation in UAE

Yes, you can resign from a limited contract before 1 year in the UAE provided that you’ve served the probationary period. However, doing so may reduce your end-of-service gratuity and trigger penalties if you breach your agreement. Review your contract thoroughly and consult legal advice before proceeding.

Yes, you can resign once you’ve served a 1 to 3 month probationary period for a UAE company. Make sure to submit a formal resignation and meet the notice period requirements set out in your contract. This process is treated like any regular resignation, with no extra penalties if done correctly.

No, you won’t have to pay a fee or penalty if you resign during probation while adhering to the notice period. However, if you transfer to another employer, they might be responsible for covering recruitment costs owed to your current employer, unless otherwise agreed.

Yes, you have the authority to resign after working for 6 months even in a 2-year limited contract as per UAE Labour Law. It’s worth noting that early resignation may prevent you from receiving end-of-service benefits. To avoid any penalties, make sure you meet the notice period requirements and review your contract for any specific clauses regarding early resignation.

If you’re resigning during your probation, it’s necessary to provide at least one month’s notice for general reasons and a 14-day notice when leaving the state. Failing to provide a notice when resigning during probation may potentially lead to a Labor ban.

Yes, you can legally switch jobs before 6 months under a limited contract in the UAE. If you’re serving a probationary period, submitting a written notice is mandatory. If you’re switching jobs locally with a new employer in the UAE, a minimum 1-month notice is required and your new company may have to cover the recruitment cost borne by your existing employer.