Gratuity laws in U.A.E drafted by Imran Khan(Legal Consultant)

- January 20, 2020 , by Maagulf

The United Arab Emirates is the second home of expatriate labor force and UAE has very strong labor laws to protect their rights.

UAE mainly has following sectors and their employment laws:

(1) Companies under Ministry of Human Resources & Emiratization, they are governed by FEDERAL LAW NO. (8) OF 1980 LABOUR LAW

(2) Domestic works govern under Federal Law no. (10) of 2017 On Domestic Workers

(3) Free Zones companies govern under their specific Employment laws (mostly follow FEDERAL LAW NO. (8) OF 1980 LABOUR LAW except DIFC, Dubai and ADGM, Abu Dhabi, they have their own Employment legislations)

In the interest and to secure future of expatriate workers all UAE employment laws have gratuity and pension provisions. Here all provisions of Gratuity laws are described:

FEDERAL LAW NO. (8) OF 1980 LABOUR LAW

Companies come under Ministry of Human Resources & Emiratization govern by this law. An employee is entitled to get gratuity after one year of continuous service.

According to ARTICLE 132, The employee who has completed one year or more in the continuous service, is entitled to the end of service remuneration at the end of his service, and the remuneration is to be calculated as follows: -

1. Twenty one day's basic pay for each year of the first five years of service.

2. Thirty days basic pay for each additional year. Provided that the entire total remuneration shall not exceed two year's pay.

Under unlimited term contract:

According to ARTICLE 137 If an employee under a contract with unlimited period has left his work at his own option after a continuous service of not less than one year and not more than three years, he shall be entitled to one third of the end of service gratuity.

If the period of his continued service is more than 3 years and less than 5 years he becomes entitled to 2/3 of the said gratuity.

if his continued service exceeds 5 years, he becomes entitled to the entire gratuity as prescribed above.

Limited Term Contract:

ARTICLE 138 provides If an employee under a contract with limited period leaves his work at his own option before the end of the contract period he shall not be entitled to end of service gratuity unless the period of his continuous service exceeds five years.

In above both term period contract, if Employment contract is terminated by employer then employee shall be liable to get full amount of gratuity as above mentioned.

The employee shall be fully deprived of the end of service gratuity in any of the following cases:

A. if he is dismissed from service for any reason in accordance with Article (120) of this Law or if he leaves his work to avoid dismissal in accordance with the provisions of this Article.

B. If he leaves his work willingly and without notice in cases other than those enumerated in Article 121 under this law with respect to unlimited period contracts or before he completes five years of continuous service with respect to limited period contracts.

Federal Law no. (10) of 2017 On Domestic Workers

Domestic workers are defined in the law and a list of 19 Types of domestic workers occupations mention in the law that include housemaid, cook, house driver, farmer, Gardner etc.

Article 26 of above mention law provides End of service compensation for the worker, who completes one year or more of continuous service, shall, at the end of service be entitled to an end-of-service compensation. The compensation shall be calculated on the basis of 14-day wages for each year of service and becomes due upon the termination of the contract.

Gratuity can be denied if contract is terminated by worker:

Article 27 provides that worker shall be denied end-of-service compensation if the contract is terminated due to unlawful discontinuance of work or if the worker acts to terminate the contract without due cause.

Free Zones companies’ law

Mostly Free zones based in UAE follow FEDERAL LAW NO. (8) OF 1980 LABOUR LAW but, Dubai International Financial Centre, Dubai and Abu Dhabi Global Market, Abu Dhabi have their own employment legislations.

EMPLOYMENT LAW DIFC

On 14 January 2020, the Employment Law on end of service is amended. The Amendment establishes a new mandatory DIFC Employee Workplace Savings (DEWS) Plan. The new law will begin from 1st of February 2020.

The monthly compulsory contributions into the Scheme DEWS must be at least 5.83 percent of the employee’s basic salary for the first five years of service from 1st month of employment and 8.33 percent of the employee’s basic salary for each additional year of service

Abu Dhabi Global Market EMPLOYMENT REGULATIONS 2015

ADGM also described gratuity rules in employment law and same rules of 21 day basic wage for first year to 5th year and 30 days basic wage after competition of 5 years and gratuity shall not exceed the wages of 2 years of service.

Above all laws give right to Employer to deduct from the gratuity any amounts payable to the Employer by the Employee.

Employee can file a complaint to appropriate authority if employer refuse to comply with the laws.

--Imran Khan(Legal Consultant),

Bin Eid Advocates & Legal Consultants,Dubai