UAE End of Contract Service Benefit
 

Hi there,
I am told that foreigners who work in the UAE are entitled to an end-of-service gratuity. Please tell me how one calculates this.

Thanks

Re: UAE End of Contract Service Benefit
 

Are you for real? Why else would anybody work there!

Re: UAE End of Contract Service Benefit
 

As per Article (132) of the UAE Federal Labour Law, and in respect to the end-of-service gratuity: A worker who has completed a period of one or more years of continuous service shall be entitled to severance pay on termination of his employment. The days of absence from work without pay shall not be included in calculating the period of service. Severance pay shall be calculated as follows:

Twenty-one days' remuneration for each year of the first five years of service. Thirty days' remuneration for each additional year of service provided that the aggregate amount of severance pay does not exceed two years' remuneration.

It's basically about 5.5%. Some contracts provide for more - most less as they split your remuneration between salary (which accrues the EOS) and benefits which doesn't.

Re: UAE End of Contract Service Benefit
 

Please forgive me - what is 'unreal' about simply asking what the calculation is - don't be so bluddy rude.
eish !!

Many thanks, Millhouse - I will now get back into my hole.

frown:

Re: UAE End of Contract Service Benefit
 

Oh, and they should also give you repatriation costs if you exit the country. I got the cash for three business class tickets to London when I went to Dubai via Hatta... :thumbsup:

Re: UAE End of Contract Service Benefit
 

Your gratuity entirely depends on whether you leave the company on your own or if the company's sacked you.

If you're leaving by choice the company's obligations are a lot less. 1 week for each year worked up to three years, 2 weeks for the fourth and fifth years and three weeks for each year above five.

Then, of course, there's what's written in your contract. Does the contract stipulate that it abides by the labour laws or if the offerings are on top of what the labour laws require?

You may be lucky and still get the full amount but on the other hand you may not. The HR departments out here are inefficient and clueless but there's no guaranteeing it will be in your favour.

Re: UAE End of Contract Service Benefit
 

Many thanks :)

Re: UAE End of Contract Service Benefit
 

Surely, if you have fulfilled the terms of your original contract, it shouldn't matter if you leave by choice.

Re: UAE End of Contract Service Benefit
 

If you have 'fulfilled' your contract (i.e. it has finished) then you're not being sacked, are you? So the comment was valid.

Re: UAE End of Contract Service Benefit
 

Many contracts are open-ended, so whenever a person leaves of their own accord they will receive a reduced gratuity payment.



Additionally, repatriation costs depend on the contract and where the worker was employed from. There is not an automatic entitlement to the cost of a flight to a home country, especially if the person moves to another company in the UAE.

Re: UAE End of Contract Service Benefit
 

Stop being such a "Mr Grumps" darling .Try and be nice sometimes!!!

Re: UAE End of Contract Service Benefit
 

Such optimism Patsy! ;)

Re: UAE End of Contract Service Benefit
 

You evidently don't understand my point. If you come here on a 3 yr contract and stay beyond that but decide to leave after (say) 10 yrs, it seems harsh to apply the reduced benefit calculation if you eventually leave of your own free will. Meow says that the benefits are reduced in such circumstances, which seems harsh to me...

Re: UAE End of Contract Service Benefit
 

Presumably you only 'stay beyond that' if they give you a new contract?

You're right - I don't understand your point..............

Re: UAE End of Contract Service Benefit
 

No I didn't quite say that. I said that not everyone is on a fixed term contract, some are open-ended so different rules can apply.

Why do people always assume that their situation is the only one?

Re: UAE End of Contract Service Benefit
 

So the rule appears to be that, irrespective of whether you are here on a fixed term or open-ended contract, you are only entitled to the full benefit package if you are told to leave by your employer. If you choose to leave of your own free will (or find it impossible to work under the conditions imposed by your employer), even if you have been here umpteen years, the greatly reduced benefit package applies. That seems to differ from KSA where I was paid the full package but left of my own free will after 8 years. Please feel free to correct me.

Re: UAE End of Contract Service Benefit
 

Grumps, if you join a company on a 3 year contract, and choose not to extend it and leave after you have completed the 3 years, then you are entitled to the full EOS. If you join on a 3 year contract, and choose to leave after 2 years, you get the reduced EOS. If you are on an unlimited/open contract and you resign at any time after 1 year, you get the reduced EOS.

Simples.

Re: UAE End of Contract Service Benefit
 

I originally came to the UAE on a 3 yr contract but am still here after 5 yrs. No subsequent contract was ever signed, so I guess it has transformed into an open contract.

Re: UAE End of Contract Service Benefit
 

Possibly, but a bit of a grey area. I am surprised that you don't have a proper contract.

End of service gratuity is not reduced if you resign after five years of service.

Re: UAE End of Contract Service Benefit
 

I believe the EOS gratuity increases after five years of employment. Does this mean if after say 6 years, you get the full increased EOS gratuity (30 days per year ?) irrespective of whether you're fired, made redundant or resign ?

Re: UAE End of Contract Service Benefit
 

That's comforting to know Meow.

Yes it does increase from (as I understand) 21 to 30 days pa.

I've never fully understood if the extra 9 days pa that you get for serving minimum 5 years only applies for year 6 onwards or for calcs for years 1-5 also. Suspect the former.

Re: UAE End of Contract Service Benefit
 

That's right. 21 days per year for first five years, then 30 days thereafter to a maximum of two years salary in total. (Some bonuses and commissions may be included dependng on contract and circumstances.)

Labour law says no reduction in gratuity after five years service, so reductions only apply for less than five years service and that varies depending on actual period of employment.

Re: UAE End of Contract Service Benefit
 

:thumbsup:

Re: UAE End of Contract Service Benefit
 

Excellent news. Any chance of a link to the relevent section of the Labour Law or perhaps the statute number, please.:thumbup:

Re: UAE End of Contract Service Benefit
 

as a one off, I agree with Grumpy. anyone got a link, as I'm sure it'll be required in the far future.

Re: UAE End of Contract Service Benefit
 

They are listed here

http://www.dubaifaqs.com/gratuity-calculation-dubai.php

Re: UAE End of Contract Service Benefit
 

Articles 137 & 138 of UAE Labour law.

Re: UAE End of Contract Service Benefit
 

In essence there are two forms of contract in the UAE. A limited and unlimited contract. Although technically, both are limited insofar as your ability to work is tied into your ability to continue to hold a valid work visa.

End of service gratuity is calculated only with reference to "basic salary", as per the Labour Law. This relates to the basic salary you are paid at the time at which your employment is terminated. This is fundamental driver for companies in the UAE to split out salary and allowances in the packages that employees are provided. Please refer to Article 134 of the Labour Law on this particular point.

For those employed in "mainland" Dubai (certain of the free zones have their own employment laws and regulations- most notably the DIFC which has its own Employment Law), you will be given 21 days gratuity for each year of service for the first 5 years of service and 30 days thereafter. You will also get gratuity for part years worked too. Gratuity is capped at 2 years salary.

For clarity, if you are employed on an unlimited contract basis as many are and you leave (i.e. you serve notice on your employer) during the first 3 years of service then you will receive 1/3 of your entitlement i.e. 7 days for each year of service. If you exercise your right to terminate between years 3-5 of service then you will receive 2/3 of your entitlement i.e. 14 days for each of service. Once you have completed 5 years service you can leave and are eligible for 21 days service for the first 5 years and 30 days thereafter. For the avoidance of doubt entitlement to end of service gratuity only kicks in once you have one years continuous service. The "discount" principal is set out in Article 137 of the Labour Law.

If your employment is terminated by your employer then you are entitled to your gratuity without any discount, provided that a) you have completed a years service and b) your contract is not terminated pursuant to Article 120 of the Labour Law- so don't go hitting anyone or the like ;-)

For those employed on fixed term contracts (or limited contracts) the general rule is that if you terminate at any time before the expiry of a fixed term contract you will not be entitled to any form of end of service gratuity, unless that employee's service has exceeded 5 years. The provision for this can be found in Article 138 of the Labour Law.

Hope this helps.

Re: UAE End of Contract Service Benefit
 

End of service gratuity can include pay other than basic salary. Regular bonueses or commissions that are set in an employment contract are included - per UAE Labour Law.

Re: UAE End of Contract Service Benefit
 

Thanks CRW1979 for clearing this one up - Especially the reference to 'Discounted Gratuity' - I have added your post to my 'Human Remains' file!

Meow you are 'Spot-On' as usual. However, as we all know 'Gratuity' and the way in which it is calculated, are a 'Sojourn into Sophistry' by many employers in the UAE. I would suggest that 'can include' and 'regular' are open to interpretation.

Re: UAE End of Contract Service Benefit
 

Thanks and no problem. I hate to disagree with statements made but the provisions of the Labour Law (or at least the English translation- which is not the governing version in any event) provides as follows (under Article 134):

"The wage used as a basis for calculating severance pay shall not include whatever is given to the worker in kind, housing allowance, transport allowance, travel allowance, overtime pay, representation allowance, cashier’s allowances, children education allowance, allowances for recreational and social facilities, and any other bonuses or allowances."

Therefore with respect I do not agree (based on the provisions of the Labour Law) with the previous statement about the inclusion of bonuses for the calculation of end of service gratuity. Obviously, an employer is at liberty to offer benefits greater than those provided for under the Labour. However, as noted earlier part of the reason that many employers will still adopt the allowances/bonus structure within a salary package is so at to limit gratuity liability.

Kind regards

Re: UAE End of Contract Service Benefit
 

My point exactly! - Salary is Salary! I always try to avoid allowances (on both sides of the fence). The company I work for is quite particular in getting the calculation correct, and we do not 'Quibble' over a few hundred here or there. We also include a 'Gratuity Statement' on the monthly Pay-Slip! - Yes, we give our staff Pay-Slips!

Re: UAE End of Contract Service Benefit
 

Wise choice! Anyway hope that helps for all who view.

Kind regards

Re: UAE End of Contract Service Benefit
 

Pensions -v- Gratuity being discussed again.
http://gulfnews.com/business/your-mo...efits-1.822898

Re: UAE End of Contract Service Benefit
 

Any old-timers out there remember the Saudi's GOSI set-up? (dates me a bit...):)

Re: UAE End of Contract Service Benefit
 

Unfortunately, I do not remember GOSI (only got to Middle East in 1996). Although I do remember Pounds Shillings and Pence, Harold Macmillan as the Prime Minister, and Kennedy being Shot! - I feel ancient!

Re: UAE End of Contract Service Benefit
 

IIRC, GOSI was General Organization for Social Insurance, and was a pension, payable anywhere in the world on reaching 60, that the Saudi's forked out to expats who went to Saudi in the early Seventies until the mid eighties, albiet with with some employee contributions. In the mid-eighties, when it appeared to stop, there used to be little adverts in the UK papers advising on how to get GOSI payments back.
Different generation, I guess.

Wikipedia has a (typically unhelpful) say on it.

Re: UAE End of Contract Service Benefit
 

I'm afraid you are incorrect when it comes to gratuity and REGULAR commissions. My comments are based on rather more than just having read an interpretation of the labour law.

Re: UAE End of Contract Service Benefit
 

[QUOTE=Meow;9442166]I'm afraid you are incorrect when it comes to gratuity and REGULAR commissions. My comments are based on rather more than just having read an interpretation of the labour law.[/Q

I think earlier you noted "bonuses" which is where I took issue with what you said. I presume that you are basing the point on "commissions" on the paragraph in a prominent local law firm's Labour Law publication which states that a UAE court judged that regular commissions would be taken into account or alternatively in relation to discussions that you have had with the Ministry of Labour which you noted in an article in the National in February. It would be interesting to see the circumstances of the judgment, particularly given that as a civil law jurisidciton there is no binding precedent as there would be in a common law jurisdiction and as such courts are free to interpret the law as they see fit in the circumstances. I would certainly be interested in you sharing any further information on this point, in particular any written advice that the Ministry of Labour have provided on this point and legal opinion you have received in support of the same. Thanks.

Re: UAE End of Contract Service Benefit
 

OK so, according to the UAE Labour Laws, I should get 21 days for each of the first 5 years as gratuity, but how is the daily rate calculated? If I work 20 days a month, would it be my monthly salary divided by 20 or my monthly salary divided by the actual number of days in a month? It may sound trivial but it makes a difference of nearly AED50,000 in my case. Does anybody know?