UAE: Is an employee entitled to gratuity during unpaid leave?

Dubai - Can an employee be penalised for not rejoining the company after a furlough?

By Ashish Mehta

Published: Sun 5 Sep 2021, 10:00 AM

Question: My friend is employed by a company in a freezone in Dubai. He was on furlough in the last six months, when he was getting paid his basic salary. The company is now calling him back, but he does not want to rejoin. Can he be penalised? Can the firm deduct any cash from his full and final settlement?

Answer: Pursuant to your queries, we assume that your friend is employed by a freezone company that follows the provisions of Federal Law No. 8 of 1980 Regulating Employment Relations in the UAE (the 'Employment Law').

An employer and an employee may mutually terminate an employment contract. This is as mentioned in Article 113 of the Employment Law as well as Article 1(I) (2) & II (1) of the Ministerial Decree No. 765 of 2015 on Rules and Conditions for the Termination of Employment Relations.

In the event your friend's employer does not agree to terminate the contract mutually while he is on leave, he may have to rejoin and then resign. Thereafter, he is entitled to all end of service benefit payments.

Further, an employee is not entitled for gratuity for the days of absence from work without pay. This is in accordance with Article 132 of the Employment Law, which states: "The employee who has completed one year or more in the continuous service, is entitled to the end of service remuneration at the end of his service. Days of absence from work without pay are not included in computing the period of service, and the remuneration is to be calculated as follows :-

1. Twenty one days' pay for each year of the first five years of service.

2. Thirty days pay for each additional year.

Provided that the entire total remuneration shall not exceed two year's pay."

Based on the aforementioned provision of law, your friend may claim the entire gratuity for the period of his employment, including the six-month period where he was paid the basic salary. However, your friend's employer may disagree and may state that your friend was on unpaid leave for six months, and is not entitled for gratuity for this period.

It is recommended that your friend contacts the Ministry of Human Resources and Emiratisation or a legal counsel in the UAE for more clarification.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: Readers may e-mail their questions to: or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

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