Gratuity and End of service settlement (UAE)

Dear ones,

Just to share some details about UAE gratuity settlements and end of service settlements.

Rules completely depends to what type of Labor contract you have. There are two types of contract in UAE:-
1) Limited Contract 2 ) Unlimited Contract

1) Limited Contract

The one who hold limited contract, his / her contract will be for a shorter period of 2 years which can be renewed for the same period later. Those on this contract will not have any rights for gratuity until they finish a minimum period of 05 years. After 05 years, whenever they want to leave the company; they will be entitled to get 30 days of basic pay for each year they worked.

Employee's last 03 months basic pay should be taken for the calculation of Gratuity. ( Not what typed in your labor contract)

For example If the person worked for 6 yrs and decided to leave company. His monthly salary for last three months was 6000 Dhs and his basic pay was 3000 Dhs; If so he will be entitled to get AED 3000 x 06 Years = 18000 Dhs as his gratuity and one way airfare allowance/ flight ticket to his home country.
That will be his end of settlement.
(Plus any pending annual vacation days+ payable overtimes..etc all should paid as cash)

On Limited Contract- Employee can leave the company with a notice for immediate effect while he should pay 45 days of his basic pay as compensation. else he has to give 30 days notice period (Some companies are charging both together to staff which is against the law- Either notice period or 45 days basic pay as compensation- only one should charge to employee) and staff is entitled to get salary for notice period - no free service required!!

2) Unlimited Contract

This contract is starting with a date without an end date. Whoever complete 2 years on this contract will be entitled to get their gratuity. This also will consider basic pay depends to last 3 months salary ( not to what typed in labor contract).

* Who completed 24 months will get 7 days of basic pay for each year they worked
* Who completed more than 24 months and upto 36 months will get 14 days of basic pay for each year they worked
* Who completed more than 36 months and upto 60 months will get 21 days of basic pay for each year they worked
*Who completed more than 60 months will get 21 days of basic pay for each year they worked upto 5 years and remaining years will be 30 days of Basic Pay.

**All the people for above category will get one way flight ticket to their home country with gratuity settlement.
(plus pending annual vacation + pending overtime settlement everything should pay as cash)

For example if the person's basic pay is AED 3000

who completed 24 months = 3000/ 30 Days x 07 Days = 700 Dhs x 02 years = AED 1400 + One way Airfare

more than 24 months upto 36 months = 3000/30 Days x 14 Days = 1400 Dhs x ___ Years = ____ + One way Airfare

More than 36 months upto 60 months = 3000/30 Days x 21 Days = 2100 Dhs x ____ + One way Airfare

More than 60 months = AED 3000/30 Days x 21 Days = AED 2100 Dhs x 05 Years + AED 3000 x ___ (Remaining time after 5 years) + one way ticket.

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On Unlimited contract - employee has complete freedom to leave the company anytime with a 30 days notice. Company has no right to charge any amount to employee as any compensation for visa/ labor card..etc and they should have to settle all gratuites as mentioned above.

"ON BOTH CONTRACTS IF EMPLOYEE HAS ANY PENDING VACATIONS DAYS- THEN THEY CAN CONSUME EITHER WITH THEIR NOTICE PERIOD OR THEY SHOULD GET IT CASHED"

NO COMPANIES IN UAE CAN MAKE THEIR OWN LAW... WE HAVE ONLY ONE LAW FOR ALL COMPANIES AND ALL SHOULD FOLLOW IT.

if any company tried to make any troubles to employee upon their resignation; please proceed to Labor department and they will do everything well for you.
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In the matter of TERMINATION (FIRED) the law sate as follows:-

On the termination of the employment contract, an employee is entitled to the following:

A notice period, or any amount due in lieu of the notice period in the case of an unlimited contract.
In the case of an unlimited contract, compensation for unreasonable dismissal if the contract was terminated by the employer for unreasonable cause. (21 Days of basic Pay for the each year they worked - for ex: if the person worked for 1.6 yrs it should calculated as 21 days for one year and 10.5 days for 6 months = 31.5 days)

In the case of a limited contract, compensation equivalent to the period until the end of the contract, or three month’s wages (Basic Pay), whichever is shorter.

Payments equivalent to the balance of non-utilized leave or any part thereof.
Payments for overtime or any balance of wages due and not yet paid.
End of service gratuity calculated on the duration of the employment.
Repatriation expenses as per the Law or the employment contact, subject to the employee not being in violation or in breach of either the Law or the employment contract.

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All the best

hope the information are clear to all

Best Regards

Malik Muhammad Ashiq