Gratuity is based on basic of last salary

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Gratuity is based on  basic of last salary

If contract is unlimited, employer can terminate it with 30 days' notice

By Mushtaq Ahmad Jan (Legal View)

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Published: Mon 23 Apr 2012, 9:55 PM

Last updated: Tue 7 Apr 2015, 12:39 PM

My husband, who works as an administration staff, will complete three years in his job in June. He has an unlimited contract and as per his offer letter, he is eligible for a ticket once in two years. Now he wishes to change his job. His salary as per the contract is Dh2,500, but now he is getting Dh3,750 because of a recent increment. He needs to give a one month notice. But should he mention that he no longer wishes to continue the contract or that he is resigning?

The contents of the letter will not make any difference as long as your husband is leaving the job and is not terminated.

The law is clear that if an employee leaves the job within the first three years, he is entitled to one third of the end of service gratuity. Since, your husband has not completed three years, he is only entitled to 1/3 of the gratuity as per Article 137 of the UAE Labour Law. Therefore, your husband may submit a simple resignation with 30 days notice. Besides, the end of service gratuity is based on the basic of the last salary without adding any benefits or allowances of any kind as per the terms of Article (134) of the Labour Law.

Labour ban

I work as a building surveyor with a construction company here on an unlimited contract. However, the company terminated my services after just six months. My probation period was three months. I would like to know if I am entitled to my salary for the rest of the year.

What are my other entitlements? Can I join another company without a ban?

Since your contract was for an unlimited period, the employer is entitled to terminate it within 30 days prior notice as per Article 117 of the UAE Labour Law.

Therefore, you are not entitled to remuneration for the rest of the year. However, if the company terminates you without notice, as per Article 119, you are entitled to compensation in lieu of notice.

Furthermore, if you are terminated for any reason not mentioned in Article 120 of the UAE Labour Code, then you are also entitled to a compensation for arbitrary termination in accordance with Article 123 of the UAE Labour Law which states: “If the employee has been arbitrarily dismissed, the competent court has the jurisdiction to give judgment against the employer for payment of compensation to the employee. The court shall determine the amount of this compensation, taking into consideration the nature of work sustained by the employee, period of service and after investigation of dismissal circumstances. Provided that in all cases the amount of compensation should not exceed the employee’s pay for a period of three months, to be worked out on the basis of last pay due to him.”

Also, you are entitled to a return flight ticket, unless you join another company here in the UAE. You can join another company without a ban if you fall in any of the following categories:

* In order to remove the ban, an employee must prove his qualifications by presenting a duly attested educational certificate as mentioned herein (i) If an employee holds a university degree (Master’s), and earns a minimum of Dh12,000 per month; (ii) If an employee holds a Diploma (post secondary) and earns a minimum of Dh7,000 per month; and (iii) If an employee has passed high school and earns a minimum of Dh5,000 per month.

* The contract is terminated due to the employer’s violation of legal and labour obligations towards the worker, or in case the worker has no role in terminating the work relationship.

* The employee is transferred to another company the employer owns or has shares in.

Compiled by Ahmed Shaaban

Mushtaq Ahmad Jan is a lawyer at the Global Advocates and Legal Consultants, with a Master’s Degree in International Commercial Law, University of Hull, Kingston-upon-Hull, England. Readers may e-mail their questions to or send them to (Legal View), Khaleej Times, PO Box 11243, Dubai

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