Limited Contract Gratuity in UAE

What Was a "Limited Contract"?

Under the previous UAE Labour Law — Federal Law No. 8 of 1980 — a limited contract (also called a fixed-term contract) was an employment agreement with a specified end date, typically not exceeding two years. Both the employer and employee were bound for the duration of the contract.

Old Rules — Limited Contract Gratuity

On Natural Expiry or Employer Termination

If a limited contract expired naturally or the employer terminated it without cause, the employee was generally entitled to full gratuity calculated at the standard rates (21 days/year for the first 5 years, then 30 days/year beyond), subject to the minimum service threshold.

On Early Resignation by the Employee

If an employee resigned before the fixed-term contract ended, they were generallynot entitled to gratuity under the old framework, unless:

• The employee had completed 5 or more years of service, or
• The employer consented to the early termination, or
• The employer had materially breached the contract

Renewal of Limited Contracts

If a limited contract was renewed multiple times, courts and MOHRE often treated the employment relationship as continuous for gratuity purposes. The total service across all renewals was generally considered.

What Changed Under the Current Law?

Federal Decree-Law No. 33 of 2021 replaced both "limited" and "unlimited" contract terminology with a new framework of work models:

• Full-time
• Part-time
• Temporary
• Flexible
• Remote
• Shared-work

Under the current law, a worker who has completed the minimum service period and resigns is generally entitled to gratuity at the standard rates — removing the previous penalty for leaving a fixed-term contract early.

Transitional Situations

If your employment started before February 2022 under a limited contract and you are assessing a complex transitional entitlement — particularly for service that spans the old and new law — you should consult a qualified UAE employment lawyer. The applicable framework depends on your specific circumstances, contract terms, and the timing of key employment events.