Legal

Limited or Fixed-Term Contracts are Beneficial for Both Parties

Dubai is a multicultural city with hundreds of foreign investors and workers from around the globe, due to the favorable employment and labor laws, which are advantageous for employees as well as employers alike.

There are various types of employment contracts, and one of the most frequently used ones is limited-term contracts, which are also known as fixed-term contracts and are generally coordinated with the residency visa for the employee. They may be for two or three years, varying as per the location of the employment. These contracts are only suitable when employers wish to contract expert professionals only for the duration of the project, and there is a deadline for the completion as well.

The best factor about fixed-term contracts is that it offers employers, an opportunity to limit their risks, by placing a limit on the distribution and entitlements an employee receives, upon terminations of the contract. Most businesses will seek legal advice and at other locations, if there are disputes which cannot be resolved and require legal assistance.

Limited-term contract advantages

Many employees use short and limited-time contracts to cover for a difficult time, such as a pregnancy or a long term sick leave. It can be for a job that has been funded for a specific set of tasks; alternatively, it can also cover some types of seasonal work for employees.

Employers, on the other hand, can look forward to applying the fixed-term contracts for employees on a probation period as it works beneficially for both parties. It is also advantageous for the employers to opt for such contractual work, especially if there is a tight budget for the project and the business owners can ascertain the labor costs ahead of time.

The probationary period is set aside by employers to ascertain the value new employees bring to the business. Therefore, many businesses offer new employees a probationary contractual term to judge their skill set and expertise before opting for the regular recruitment process with normal terms of employment. Employers also often use these types of contracts to cover for permanent employees on leave due to unavoidable circumstances.

Limited-term contracts help an organization save thousands each year on employee remuneration, especially so, for underperforming workers that are struggling to cope. It also reduces the chances of unfair or unethical dismissal, as most of these contracts do not have to be renewed at all.

Drawbacks of short terms contracts

While all the advantages are perks that have been discussed, there are also drawbacks when considering this type of employment. Employers, for instance, cannot cut short a contract whether they appreciate the new employee or not. This can pose problems for many businesses, as often an underperforming contractual employee cannot be dismissed. If that does happen, employers will have to pay compensation for the rest of the term of the contract. To avoid such a needlessly expensive hassle, many employers include a clause in their contract for early dismissal, in case of underperformance.

In case of severe dispute with a contractual employee, the business will opt for legal advice in Dubai and will most likely to have to fight it out on the labor court, which is feasible only if there is a strong and established presence in the country, without which, the business is likely to bear the brunt of the misplaced actions.

In conclusion, limited-term conduct is often the best way forward for startups and small businesses that are trying to save costs, and are unsure about their staffing requirements, or doubtful about the employees’ performances. It is also advantageous for the employees to start with fixed-term contracts, and then move on to the regular recruitment process in case of extensions.

The limited-term contract is extremely beneficial for companies looking to hire a global workforce, without the long term commitment; any hassle or dispute require professional legal advice from an expert employment Lawyer in Dubai and at other locations worldwide, in compliance with the local laws and regulations for optimal outcomes.

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