What Happened to Limited and Unlimited Contracts in the UAE?

Key facts

The specifics, before the explanation.

• The old unlimited contract category was abolished under Article 8 of Federal Decree-Law No. 33 of 2021
• Every new contract, regardless of seniority or industry, must specify a fixed term
• Contracts were initially capped at 3 years; that cap was removed in September 2022 by Federal Decree No. 14/2022
• Employers and employees can now agree on any contract length: 1 year, 5 years, or longer
• Contracts are renewable by mutual agreement for the same or a different period
• All legacy unlimited contracts had to be converted to fixed-term by 31 December 2023

What this actually means

For years, UAE job seekers weighed "limited" versus "unlimited" contracts as a real tradeoff: unlimited contracts were harder to end without notice but came with lower end-of-service penalties if you resigned early; limited contracts were the reverse. That distinction is now history. Since 2022, every private-sector contract is fixed-term by law, so the question isn't which type to pick, it's whether your specific contract terms (length, notice period, renewal clause) are fair and clearly written.

This matters most for candidates evaluating an offer: focus your questions on the actual contract duration, the notice period stated in it (legally between 30 and 90 days), and the renewal terms, rather than on the old limited/unlimited framing, which some recruiters and even some employers still use out of habit.

If a company still describes its contracts as "unlimited" in 2026, it's worth asking directly what they actually mean, since the category has had no legal basis since the end of 2023.

What to actually do

Rules and figures move. Confirm anything time-sensitive with the official regulator before you rely on it.

• Read the actual contract duration and renewal clause rather than asking whether it's "limited" or "unlimited"
• Confirm the notice period written into your contract sits within the legal 30-90 day range
• If a recruiter mentions "unlimited contract," ask them to clarify — the term has had no legal basis since 2023
• Fixed-term doesn't mean short-term: contracts can now run for many years with no legal cap
• Get contract terms confirmed in writing and registered with MOHRE before you rely on a verbal offer

Frequently asked questions

Can my employer still offer me an unlimited contract in 2026?

No. The unlimited contract category was legally abolished, and all remaining unlimited contracts had to be converted to fixed-term by the end of 2023.

Does a fixed-term contract mean I lose my job automatically when it ends?

Not necessarily. Contracts are renewable by mutual agreement, and many fixed-term contracts run for multiple years or renew automatically under agreed terms.

Does contract type affect my gratuity calculation?

Gratuity is now calculated the same way for all employees under the current law, regardless of the old limited/unlimited distinction.

Sources

Referenced for this guide:

• KlayLegal: How to Check Whether Your UAE Contract Is Unlimited or Limited
• RadixHR: Employment Contracts UAE 2026, Types, Rules & Requirements