Which is Better: Limited or Unlimited Contract in UAE?

In the United Arab Emirates (UAE), individuals have the option to enter into either a limited or unlimited contract when signing employment agreements. Both types of contracts have their own advantages and disadvantages, so it’s crucial to understand the differences before making a decision.

Limited Contract

A limited contract is a fixed-term agreement between an employer and an employee. This type of contract specifies the duration of employment, which is usually between one to three years. During this period, the employee is bound by the terms and conditions set forth in the contract. Breaking the contract before its expiry may result in penalties for both parties.

One advantage of a limited contract is job security for the employee. They are guaranteed employment for the duration specified in the contract, and the employer cannot terminate their employment without a valid reason. Additionally, limited contracts often offer benefits such as health insurance, annual leave, and end-of-service gratuity.

However, limited contracts also have drawbacks. The employee may feel trapped in a job they no longer enjoy or find suitable. Breaking the contract before its expiry can result in a ban from working in the UAE for a certain period of time. Moreover, the employer may not renew the contract at the end of its term, leaving the employee searching for new employment.

Unlimited Contract

An unlimited contract is an open-ended agreement between an employer and an employee. Unlike a limited contract, it does not specify a fixed duration of employment. Instead, the contract continues until either party terminates it by giving the required notice period.

One advantage of an unlimited contract is flexibility. It allows the employee to change jobs or careers without facing penalties or bans. The employee also has the freedom to negotiate salary increases or other terms during the course of employment.

However, an unlimited contract may offer less job security compared to a limited contract. The employer has the right to terminate the employment at any time, as long as they provide the required notice period. Additionally, the employee may not be entitled to certain benefits provided in limited contracts, such as end-of-service gratuity.

Choosing the Right Contract

When deciding between a limited or unlimited contract in the UAE, it is essential to consider your individual circumstances and priorities. Factors such as job security, flexibility, and benefits should be weighed carefully.

To make an informed decision, it can be helpful to seek legal advice or consult resources such as the UAE labor law. Understanding your rights and obligations under each type of contract will ensure you enter into an agreement that aligns with your needs and goals.


Whether you choose a limited or unlimited contract in the UAE, it’s important to fully understand the implications of each type of agreement. Both options come with their own set of advantages and disadvantages, and the choice ultimately depends on your personal circumstances and priorities.


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