Employees in UAE are entitled to gratuity after one year in job
Dubai - Days of absence from work without pay shall not be included in calculating the period of service.
Q1) I worked for an international life insurance company as a sales agent on a commission basis and without a fixed salary. I have resigned from my employment due to my ill health. Am I entitled to any end of service benefits as per my commission or the salary mentioned in my employment contract?
We assume that you are employed by a company based in the mainland of UAE and therefore, the provisions of Federal Law No. (8) of 1980 regulating employment relations in the UAE (the 'Employment Law') shall be applicable. As per the provisions of the Employment Law, it may be noted that an employee shall be entitled to a severance pay at the end of his employment provided the employee completes one year of service (under unlimited period of contract). This is in accordance with Article 132 of the Employment Law which states: "An employee who has completed a period of one or more years of continuous service shall be entitled to an end of service gratuity upon the termination of his service. The days of absence from work without pay shall not be included in calculating the period of service. The severance pay shall be calculated as follows:
1. 21 days' remuneration for each of the first five years of service.
2. 30 days' remuneration for each additional year of service provided always that the aggregate amount of severance pay should not exceed two year's remuneration."
If an employee is employed on limited period of employment contract then he shall be entitled to severance pay only upon completion of five years of continuous employment with an employer. This is in accordance with Article 138 of the Employment Law which states: "Where an employee on an employment contract of a determined term leaves his employment by his own choice prior to the expiry of his contract, he shall not be entitled to an end of service gratuity unless his continuous period of service exceeds five years." However, under a limited period of employment contract an employee may be eligible for severance pay even if he does not complete five continuous years of service provided his job agreement expires and he does not wish to renew it.
As your remuneration includes commission, your end of service benefits will be calculated based only on the registered employment contract. The calculation of severance pay will be only on the basic salary mentioned in your employment contract.
This is in accordance with Article 134 of the Employment Law which states: "Without prejudice to the provisions of laws that grant pensions or retirement benefits to employees in certain establishments, end of service gratuity shall be calculated on the basis of the remuneration last due to the employee for those who are remunerated on a monthly, weekly or daily basis and on the average basis of the daily remuneration referred to in Article 57 hereof for those paid on piecemeal. The remuneration used as a basis for calculating end of service gratuity shall not include what is given to the employee 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."
On the other hand severance pay, end of service benefits includes annual leave salary for the annual leave not availed by you, air ticket fare for your repatriation and if any savings fund created for employees in your company. This is in accordance with Article 79, Article 131 and Article 140 of the Employment Law.
Know the law
Where an employee on an employment contract of a determined term leaves his employment by his own choice prior to the expiry of his contract, he shall not be entitled to an end of service gratuity unless his continuous period of service exceeds five years.
Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom, Singapore, and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: email@example.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.