The short answer for 2025
For private-sector jobs regulated by MOHRE on the UAE mainland, unlimited contracts have been phased out. All employment must be on limited (fixed-term) contracts. The government first required conversion in 2022 and extended the final deadline to 31 December 2023. That conversion is now complete. The old three-year cap on contract length was removed in late 2022, so parties can agree any fixed term and renew it. (UAE Government Portal, PwC, Pinsent Masons)
Why people still say “limited vs unlimited”
Before 2022, UAE labour law allowed both limited and unlimited contracts, with different exit rules. The 2022 law replaced that system with one unified framework based on limited contracts, which is why you still hear the old terms even though only limited contracts now apply onshore. (Al Tamimi & Company)
What a limited contract means today
A limited contract is a fixed term that you and your employer agree in writing. It can be renewed or extended. Either party can end it for a legitimate reason by giving written notice of at least 30 days and at most 90 days. If notice is not worked, the party who skips it must pay the other compensation equal to the unserved notice. If termination is unlawful under Article 47, courts may award compensation up to three months’ wage. (UAE Government Portal)
During notice the employee is entitled to full pay, and if the employer ends the contract the employee may take one unpaid day per week to look for a new job, with prior notice to the employer. (UAE Government Portal)
What if your contract still says “unlimited” in 2025
MOHRE required employers to convert old unlimited agreements to limited ones. If your paperwork still shows “unlimited,” ask HR to issue an updated MOHRE contract. The legal obligation to convert sat with employers, and the change did not reduce statutory rights. (PwC)
Gratuity in 2025
Gratuity is based on basic salary and service length. After one year of continuous service, the entitlement is 21 days’ basic wage for each of the first five years and 30 days’ basic wage for each year after that, capped at two years of wage in total. Under the new law, resignation no longer reduces the gratuity percentage. Employers must settle end-of-service dues promptly. (UAE Government Portal, Morgan Lewis)
Important exceptions you should know
Two financial free zones run their own employment laws.
DIFC
DIFC allows fixed-term or indefinite contracts and replaced traditional gratuity with the DEWS savings plan, which requires monthly employer contributions into a regulated scheme or a qualifying alternative. (Thomson Reuters MENA, DIFC)
ADGM
ADGM’s Employment Regulations permit fixed-term or indefinite contracts and set their own documentation rules. There is no mandated minimum or maximum term, and contracts must be in writing. (ADGM Assets)
If you work for a government entity, separate public-sector rules may apply.
Limited vs Unlimited at a glance (context for 2025)
| Topic | Limited contract (what applies onshore now) | Unlimited contract (legacy onshore concept) |
|---|---|---|
| Availability on UAE mainland in 2025 | Required for private-sector roles | Phased out and no longer issued |
| Term | Fixed term agreed by parties, length not capped by law | No fixed end date under the old regime |
| Ending the contract | Either party may end with written notice from 30 to 90 days, or for defined legal reasons | Earlier rules varied, now superseded for onshore roles |
| Compensation if notice is skipped | Party who skips notice pays the other an allowance equal to unserved notice | Legacy rules varied |
| Gratuity | 21 days per year for first five years, then 30 days per year, capped at two years’ wage | Under old law resignation could reduce amounts, now unified onshore |
Sources for the table entries include the UAE Government portal and the current Labour Law. (UAE Government Portal)
Common scenarios explained
Resigning before the term ends
You can resign by giving the agreed notice within the 30 to 90 day window. If you leave earlier than your notice, you pay compensation equal to the unserved days. (UAE Government Portal)
Employer ending the contract early
The employer can end the contract with notice for a legitimate reason. If termination is illegal under Article 47, a court can award compensation up to three months’ wage in addition to other dues. (UAE Government Portal)
During probation
Probation can be used, but termination still needs notice. Both sides must give notice during probation, with specific rules depending on whether the employee is leaving the UAE or changing jobs. (UAE Government Portal)
Visa alignment
Your employment term and your work permit or residency status must stay in sync. If a permit cannot be renewed for reasons beyond your control, the law lists this as a valid termination scenario. (UAE Government Portal)
Key sources if you want to read the law
UAE Government portal pages on contracts, termination and gratuity explain the current position. The 2021 Labour Law and its 2022 amendment removed unlimited contracts onshore and lifted the three-year cap. Reputable legal updates confirm the conversion deadline and the cap removal. (UAE Government Portal, Pinsent Masons)
If you want, I can also draft a short FAQ for employees and HR teams in Dubai that you can paste into an internal handbook.