الأحكام الخاصة بمكافأة نهاية الخدمة في القوانين الاماراتية

A Brief on the End of Service Gratuity Laws in the UAE

The UAE has mainly the 3 sectors which have their employment laws, like the laws of companies under MOHRE (governed by Federal Law no. (8) of 1980 Labour Law, Domestic works govern under Federal Law no. (10) of 2017 On Domestic Workers and Free Zone companies governed by their specific employment laws.

The United Arab Emirates is the second home of the expatriate labour force with very strong labour laws to protect their rights. The UAE mainly has the following sectors and their employment laws:

(1) Companies under the Ministry of Human Resources & Emiratization, they are governed by Federal Law no. (8) of 1980 Labour Law
(2) Domestic workers governed by Federal Law no. (10) of 2017 On Domestic Workers
(3) Free Zones companies governed by 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 legislation).

In the interest and to secure the future of expatriate workers, all the 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 the Ministry of Human Resources & Emiratization are governed 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 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 days of basic pay for each year of the first five years of service.
2. Thirty days of 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.

Under 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 both term period contracts, if the employment contract is terminated by the employer, then the employee shall be eligible to get the 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 mentioned in the law that include housemaid, cook, house driver, farmer, gardener…etc. Article 26 of abovementioned law provides end of service compensation for the worker who completes one year or more of continuous service, who shall at the end of service be entitled to an end-of-service compensation. The compensation shall be calculated on the basis of a 14-day wage for each year of service and becomes due upon the termination of the contract.

Gratuity can be denied if the contract is terminated by the worker. Article 27 provides that the 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 the UAE follow the Federal Law no. (8) of 1980 Labour Law, but Dubai International Financial Center and Abu Dhabi Global Market have their own employment legislation.

Employment Law of DIFC issued on 14 January 2020

Employment Law on the end of service is amended. The amendment establishes a new mandatory DIFC Employee Workplace Savings (DEWS) Plan. The new law will begin on the 1st of February 2020. The monthly compulsory contributions into the Scheme DEWS must be at least 5.83 per cent of the employee’s basic salary for the first five years of service from 1st month of employment and 8.33 per cent of the employee’s basic salary for each additional year of service Abu Dhabi Global Market.

ADGM Employment Regulations of 2015

This also described gratuity rules in the employment law and same rules of the 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 the right to Employer to deduct from the gratuity any amounts payable to the employer by the employee. The employee can file a complaint to the appropriate authority if the employer refuses to comply with the laws.

Written by:

Imran Khan | Bin Eid Advocates & Legal Consultants

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