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21 days wage as gratuity for first five yrs of service

(Legal View) / 27 April 2008

K.K Sarachandra Bose is a Partner/ Corporate, Commercial and Contract Lawyer at Dar Al Adalah Advocates and Legal Consultants. Readers may e-mail their questions to: ktedit@emirates.net.ae or send them to 'Legal View', Khaleej Times, Dubai P.O Box 11243.

Q. Iíve been working with a company here since February 18, 2000. My contract of employment is renewed on a yearly basis. An amount equivalent to 21 daysí remuneration is paid to me upon each renewal. Can you clarify how to calculate my gratuity?

A. As per the UAE Labour Law, the gratuity shall be calculated as follows: Twenty-one daysí wage for each year of the first five years; and thirty daysí wage for each additional year on condition that the total of the gratuity does not exceed the wages of two years. From your question, it is evident that your contract is a limited one.

An employee who completes one year or more in continuous service shall be entitled to gratuity at the end of his service. The days of absence from work without pay shall not be included in calculating the length of service. The law also stipulates that an employee is entitled to a gratuity for the fractions of the year provided that he has completed one year in continuous service. Therefore, even though your contract has been renewed annually, your service will be considered as continuous one.

Seven days gratuity for less than three years

Q. I would like to know if I am entitled to a gratuity on the completion of three years of an unlimited contract. If yes, then how is the calculation for the same made? Also, if I decide to resign before the completion of three years, would I still be eligible for gratuity? If yes, would there be a difference in calculation from above. Finally, I have heard that a ban is not imposed on expatriates who complete the three-year visa period (for unlimited contracts) and can freely change jobs without the need of NOC/release etc from their current employer.

A. As per the UAE Labour Law, you are entitled to receive gratuity. The law specifies that an employee employed under a contract of unspecified terms resign after a continuous service of not less than a year and not more than three years is entitled to one-third (i.e. seven days) of the end of service gratuity. If the period of continuous service was more than three years and less than five years, he is entitled to two-thirds (14 days) of the gratuity. If the service is more than five years, then from the fifth year onwards, he is entitled to gratuity of 30 days per year, provided that the total gratuity shall not exceed the wages of two years. Therefore, after the completion of your third year in the job, your gratuity shall be calculated 21 days (i.e. your one-dayís salary multiplied by 21) will be your third yearís gratuity.  If you resign before the completion of the third year, you are entitled only for seven days gratuity. Regarding ban, you may contact the department concerned for the latest updates.

Maximum work hours must be 48 in a week

Q. I work in a managerial position with a big manufacturing plant here. Last month, the employees received 3.5 hours of overtime against their 12-hour shift duty. All the employees complained to the Finance Manager, who replied that on 12-hour duty, the 30-minute lunch break is not payable. Is this legally sound?

A. As per the law, the maximum working hours for adult employees shall be eight hours daily or 48 hours per week. However, working hours may be increased to nine hours daily for people employed in trades, hotels, cafes, restaurants etc. The daily working hours shall be arranged so that no employee shall spend more than five consecutive hours without intervals for rest, prayers and meal. The total of these intervals must not be less than one hour. The intervals shall not be included in the working hours.

If the nature of the job requires overtime, the employees shall be paid overtime and the payment shall be equivalent to the wage paid for the ordinary working hours plus an increase of not less than 25 per cent of his wage for the overtime period.   -    Compiled by Ahmed Shaaban

 
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