5 August 2026 · Contracts
Limited vs Unlimited Contract Gratuity
The limited-versus-unlimited contract distinction is history. Federal Decree-Law No. 33 of 2021 moved all private-sector employees onto fixed-term contracts from February 2022 and removed the old sliding-scale reductions that cut gratuity when you resigned from an unlimited contract. Today an employee who completes one year is broadly entitled to gratuity on the same 21/30-day basis whether they resign or are terminated. If your calculation still applies one-third or two-thirds reductions on resignation, it is using the repealed law. The exact treatment of specific exit routes still depends on the facts, so confirm any borderline case with MOHRE.
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One contract type now
Fixed-term for everyone.
- Unlimited contracts phased out.
- All contracts now fixed-term.
- Effective from February 2022.
- Old sliding-scale reductions removed.
Resignation no longer cuts gratuity
Same basis either way.
- 21/30-day formula applies to resignation too.
- The one-year gate still applies.
- No more one-third or two-thirds reductions.
- Termination and resignation broadly align.
Facts still matter
Borderline exits need care.
- Specific exit routes turn on the facts.
- Summary dismissal cases differ.
- Free zones may run their own rules.
- Confirm edge cases with MOHRE.
Related guides
Frequently Asked Questions
For contract type and gratuity.
Does contract type still affect my gratuity?
No. The limited/unlimited distinction was removed by Federal Decree-Law No. 33 of 2021. All private-sector employees are now on fixed-term contracts.
Is gratuity reduced if I resign?
Not in the way it once was. The old sliding-scale reductions for unlimited contracts are gone, so a resigning employee who has completed a year is broadly entitled on the same basis as one who is terminated.
When did the new law take effect?
February 2022, under Federal Decree-Law No. 33 of 2021 and its Executive Regulations.
Are there still exceptions?
Specific exit routes, such as summary dismissal, turn on the facts, and some free zones run separate regimes. Confirm any borderline case with MOHRE.
My contract still says 'unlimited' — what applies?
The new fixed-term rules apply regardless of old wording. Existing contracts were required to be brought into line with the 2021 law.
Can Exiloz confirm which rules apply to me?
Yes. We check the contract, the exit route and the governing regime, and calculate gratuity on the correct basis.
Know which rules apply
Exiloz checks the contract and exit route and calculates correctly.