Gratuity in UAE: Will leave without pay impact final settlement calculations?

Question: I had to take some leaves without pay due to an emergency back home. Could you advise if this will impact my end-of-service gratuity? Also, please explain how it is calculated and paid.

Response: Pursuant to your queries, it is assumed that you are an expatriate employed by a mainland company in the UAE on a full-time basis. Therefore, the provisions of Federal Decree Law No. 33 of 2021 on the Regulation of the Employment Relations (the ‘Employment Law’) are applicable.

In the UAE, an employee is entitled for severance pay (gratuity) if he or she has completed one year of continuous service with an employer. This is in accordance with Article 51(2) of the Employment Law, which states: "A foreign full-time employee who completes one or more year in the continuous service is entitled to a severance pay, which is calculated on the basis of the basic salary as follows:

a. 21 working days salary for each of the first five years of service.

b. 30 working days salary for each subsequent year of service.”

Further, period of absence from work without pay may not be included while calculating the severance pay (gratuity). This is in accordance with Article 51(4) of the Employment Law, which states: “Days of absence from work without pay shall not be counted within the period of service.”

An employer may deduct certain amount from the gratuity of an employee which is due to it either by law or on an order of the court. This is in accordance with Article 51 (7) of the Employment Law, which states: ”The employer may deduct from the severance pay, any amounts due by law or court order, in accordance with the conditions and procedures set by the Executive Regulations of this Decree-Law.”

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