Article 116 of The UAE labor law is an important provision that governs the use of limited contracts in the UAE. In the United Arab Emirates, the use of limited employment contracts is governed by Articles 116 and 121 of Federal Law No. 8 of 1980 regarding the Regulation of Labor Relations (also referred to as the UAE Labor Law).
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What is Article 116 of The UAE labor law?
Article 116 states that “An employment contract may be limited for a specified period or limited to complete a specific task or seasonal work.”
In other words, a contract entered into for a limited time, not to exceed four years, is described as a limited contract under Article 116. Employers may use this kind of contract for a variety of purposes, including the completion of specific projects or the filling of temporary positions. However, using limited contracts in the UAE is subject to strict regulations.
The key requirements of Article 116 of the UAE Labour Law
The main conditions for terminating employment contracts are outlined in Article 116 of the UAE Labour Law. The following criteria apply:
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Notice period
Before ending the contract, either the employer or the employee must give the other party notice. The employment contract or the relevant law should specify the notice period, which cannot be less than 30 days.
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Severance pay
The employee is entitled to severance pay if the employer terminates the contract, and the amount should be determined using the employee’s length of service and last salary. No more than three months’ worth of wages should be given in severance pay.
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Gratuity at the end of service:
If the employee has worked for at least a year in a row without taking a break, they are eligible for an end-of-service bonus. Based on the employee’s most recent salary and the number of years of service, the gratuity should be determined. For the first five years of service, the gratuity cannot be less than 21 days’ pay; for each additional year of service, it cannot be less than 30 days’ pay.
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Property returned to the business:
Before the contract expires, the employee is required to return any company property in their possession.
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Financial obligations are paid:
Any monetary obligations, including unpaid wages, gratuities at the end of the employee’s employment, and other entitlements, must be settled by the employer.
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Clearly Definable Contract:
The written contract that outlines the terms and conditions of the employee’s employment must be provided by the employer.
Both parties must sign this document, which must specify the terms of the agreement, the employee’s compensation and benefits, and any other pertinent terms and conditions.
Exceptional Situations:
It is crucial to be aware that there are some situations where an employer may be able to fire an employee without providing them with notice or severance pay, such as when there has been extreme misconduct or a violation of company rules. However, in these circumstances, the employer is required to adhere to the steps outlined in UAE Labor Law.
However, the employer may be required to compensate the employee if the limited contract is terminated without a good reason. The amount of compensation that must be paid will vary depending on a number of variables, including the duration of the contract and the employee’s previous salary.
Articles 116 and 121 of The UAE labor law
Guidelines for the authorized use and renewal of limited employment contracts in the UAE are outlined in Articles 116 and 121.
They permit employers the flexibility to hire staff members on fixed-term contracts while attempting to uphold fairness and stop the abuse.
When properly implemented, these articles allow for the fair and legal use of limited contracts in the UAE labor market, meeting the needs of both employers and employees.
Overall, under Article 116 of The UAE labor law, Employers are responsible for ensuring that they adhere to all of the provisions of this article, including the need for written contracts, notice periods, and the avoidance of any legal loopholes.
