Unlimited contracts had no end date. They were common under the previous Labour Law and came with a reduced gratuity scale for employees who resigned. Here is how that scale works and where it still matters.
The current law uses fixed-term contracts only, and employers were required to convert unlimited contracts. If your contract has been converted or renewed, the standard 21-day and 30-day scale applies whether you resign or are terminated.
If you were terminated
Termination on an unlimited contract earns the full scale: 21 days of basic salary for each of the first five years and 30 days for each later year.
If you resigned
Under the older rules, an employee who resigned from an unlimited contract received a share of the 21-day entitlement that depended on length of service:
| Length of service | Share of gratuity |
|---|---|
| Less than 1 year | None |
| 1 to 3 years | One third of 21 days per year |
| 3 to 5 years | Two thirds of 21 days per year |
| More than 5 years | Full entitlement |
How our calculator applies it
When you choose Unlimited and Resignation, the calculator works year by year instead of applying one share to the whole period:
- Years 1 and 2 each count for one third of 21 days of basic salary.
- Years 3 and 4 each count for two thirds of 21 days.
- Year 5 and every later year count for 30 days.
This gives a cautious figure. Under the older rule, the share in the table above applied to your whole period of service, and an employee who resigned after more than five years received the full entitlement. If that describes you, select Termination in the calculator to see the full-scale amount.
Worked example
Basic salary AED 6,000, unlimited contract, resignation after four complete years.
- 21 days of basic salary: 6,000 × 21 ÷ 30 = AED 4,200
- Years 1 and 2: 4,200 ÷ 3 = AED 1,400 each, AED 2,800 in total
- Years 3 and 4: 4,200 × 2 ÷ 3 = AED 2,800 each, AED 5,600 in total
- Gratuity: AED 8,400
That is the calculator's year-by-year figure. Two thirds of the full four-year entitlement, which is how the older rule was worded, comes to 16,800 × 2 ÷ 3 = AED 11,200. The same employee on a limited contract, or terminated, would receive the full 4 × 4,200 = AED 16,800.
Which rule applies to you?
Look at your most recent contract registered with MOHRE. If it has an end date, it is a fixed-term contract and the standard scale applies. If you are unsure which rules cover an older period of service, ask your HR department for a written calculation or check with MOHRE.
Frequently asked questions
Do unlimited contracts still exist in the UAE?
New contracts are fixed-term only. Employers were required to convert existing unlimited contracts to fixed-term contracts under the current Labour Law.
Do I lose gratuity if I resign under the current law?
No. Under the current law an employee with at least one year of service is entitled to full gratuity on resignation.