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UAE Labour Law Section 16 - Payment of Gratuity

http://gulfnews.com/uaessentials/ask-the-law/uae-labour-law-section-1-introduction1.1208192 Full text of Article 16 of the UAE Labour Law XVI. PAYMENT OF GRATUITY 1. What is the employee entitled to at the termination of the employment contract? The employee at the termination of the employment contract will be entitled for to the following: A notice period, or any amount due in lieu of the notice period, in the case of an unlimited contract. Compensation for the unreasonable dismissal if the contract was terminated by the employer for unreasonable cause, in the case of an unlimited contract. In the case of a limited contract, compensation equivalent to the period until the end of the contract, or three month's salary whichever is greater. Payments equivalent to the balance of unutilized leave or any part thereof. Payments for overtime or any balance of wages due and not yet paid. End of service gratuity calculated on the duration of the employment. Repatriation expense as per the law or the contact. 2. What does the term end of service gratuity mean in terms of compensation? An employee who completes one year or more in continuous service shall be entitled to gratuity at the end of the service. The gratuity shall be calculated as follows: 21 day's wages for each year of the first five years. 30 day's wages for each additional year on condition that the total of the gratuity shall not exceed the wages of two years. 3. How is gratuity calculated? Gratuity is calculated on an annual basis if the employee has actually completed one year of employment with the employer or more. The day of absence from work without pay shall not be included in calculating the length of service. However, if the employee completed a year in service he will be entitled to a gratuity for the fraction of the year proportional for the part of the year he spent in work provided that he has completed one year in continuous service. 4. On what basis is gratuity calculated?

Without prejudice to what is stipulated by some laws in the granting of pensions or retirement benefits to employees, in some establishments gratuity for those who are paid monthly, weekly or daily wages shall be calculated as follows: Basic wage which is taken as a basis for the calculation of gratuity is that which is last received by the employee before the termination of the employment contract. This wage will be the basis for calculating the gratuity for all the years during which the employee works for the employer calculated at the rate advised here above. 5. What does a basic wage mean? A basic wage means anything received by the employee as a wage excluding housing, transport, travelling allowances and overtime, family allowances, entertaining allowances and any other allowances or a bonus. 6. Would a commission or payment by percentage be considered a basic wage? According to recent judgment delivered by the UAE court, any amount payable to employee as wage other than allowances or bonus including wages paid by percent, commission or by performance will be considered a wage and will be taken into consideration in calculating gratuity. 7. Would an employee employed prior to the law coming into use be entitled to gratuity? According to the UAE law, employees who are working with their employer prior to the date on which the law came into force will not be entitled for gratuity for the period preceding the law. Without prejudice to any entitlement or payment they were entitled to under laws or regulations. However, gratuity for those employees will be calculated on the date the law came into force thereafter. 8. Can the employer deduct any payment from the gratuity payable to the employee? The employer may deduct any amount due and payable to the employee to the employer from the end of the service gratuity and make payment for the balance to the employee. If there is any dispute over payment of gratuity or amount payable to the employer, the matter should be put to the labour office for mediation. 9. Does it make difference to the amount calculated for the gratuity if the employee resigned from employment? An employee employed under a contract for unlimited period who resigned after a continuous service of not less than a year and not more than three years is entitled to one third of the end of service gratuity provided above. If the period of continuous service was more than three years and less than five years he is entitled to two thirds of the gratuity. If his continuous service was more than five years, he shall be entitled to the full gratuity.

If an employee who is employed under a contract of limited period, resigned with his free will before the end of the contract, he shall not be entitled to the end of service gratuity unless his continuous service exceeds five years. 10. Can an employee be deprived of his end of service gratuity and under what circumstances? An employee may also be deprived of his gratuity in either of the following two cases. He has been dismissed for one of the reasons stated in Article 120 of this law, or if he left work to avoid dismissal. If he left his job voluntarily without notice in cases other than the two provided for in Article 121 of this law. This applies to unlimited period contract and in cases where the employee did not complete five years of continuous employment in a contract of limited term. If the establishment or company has a pension scheme which is beneficial to the employee, would it be a substitution for payment of gratuity? If the employer has pension scheme applicable to all employees at the company or the establishment, such a scheme must be published and known to all employees, and at the same time, specify that this scheme will be a substitution for the gratuity rules governed by the UAE Federal Labour Law. It must be more beneficial to the employees than the gratuity provision of the law. Otherwise the employee may benefit from both. 11. Can the employee and the employer agree to pay gratuity for determination of the employment contract for the proceeding period? The employer and the employer may agree to pay at a certain time the gratuity to the employee for the years during which the employee served the employer, and to start with a new contract for the future period. Provided always however, that this agreement is clearly stated, acknowledged, and agreed between the employee and employer whereby gratuity will be paid for the proceeding period, and a new contract will be entered into for the future relationship. This, bearing in mind that the employee's employment with the employer will still be considered as a continuous period for the purpose of the calculation of the interest, or at the time when he resigns, calculating the years during which he was employed with the employer. 12. Can an employee mortgage or assign payment of his gratuity? It is possible to mortgage or assign payment of the employee's gratuity to the employer or to the third party by mutual agreements provided that in the agreement with the third party, the employer and the employee should consent and agree to this in writing with an understanding of all parties that the employee may forfeit his right for a gratuity which is not yet due if he has violated the provision of the law as stipulated above. 13. When does gratuity become due and payable?

Gratuity will only become due and payable at the end of or at the termination of the contract. 14. Would end of service gratuity and other dues payable to the employee be considered priority debts? The employee's wages, overtime, and any other benefits, including the end of service gratuity, is considered a preferential debt and the employee shall have a lien over any movable or immovable property owned by the employer ranking second to government charges, judicial fees and family alimony payments.

No objection certificate
I've worked with my present company for 10 months and found a new job. I can't get NOC.
A reader from Dubai asks: I've worked with my present company for 10 months and found a new job. I can't get NOC. As I know, once my work permit is cancelled, there will be a 6-month ban. I am willing to pay whatever fee required. What can I do to be able to join the new company? How to lift the 6-month ban? I would like to clarify to the questioner that a 6-month ban could be lifted by the following two cases: 1. The worker shall spend 3 years with the sponsor; in this case, the worker may transfer to another sponsor without the need to No Objection Certificate from the earlier sponsor. 2. The worker shall obtain No Objection Certificate from the sponsor to enable him to transfer to new sponsor. And thus, the ban can be lifted by only the above mentioned two cases. Therefore, the questioner may transfer to another sponsor after obtaining No Objection Certificate from the current sponsor, and maybe the questioner could offer the company a sum of money for this Certificate as compensation for the visa expenses incurred by the company. A reader from Dubai asks: I've worked with my present company for 10 months and found a new job. I can't get NOC. As I know, once my work permit is cancelled, there will be a 6-month ban. I am willing to pay whatever fee required. What can I do to be able to join the new company? How to lift the 6-month ban? I would like to clarify to the questioner that a 6-month ban could be lifted by the following two cases: 1. The worker shall spend 3 years with the sponsor; in this case, the worker may transfer to another sponsor without the need to No Objection Certificate from the earlier sponsor. 2. The worker shall obtain No Objection Certificate from the sponsor to enable him to transfer to new sponsor. And thus, the ban can be lifted by only the above mentioned two cases. Therefore, the questioner may transfer to another sponsor after obtaining No Objection Certificate from the current sponsor, and maybe the questioner could offer the company a sum of money for this Certificate as compensation for the visa expenses incurred by the company.

III. EMPLOYMENT CONTRACT 1. What are the permitted tenures of employment contracts?

Two types of employment contracts are permissible: Limited employment contracts which are contracts for a specified duration with specific commencement and completion dates, and unlimited contracts by which the employee will continue to work for the employer from a specific date till such time as the employment contract is terminated by either party after giving prior notice. 2. What is the difference between a limited and an unlimited employment contract? A limited contract has the following characteristics: It has a commencement and completion date. Its term cannot be in excess of a period of 4 years. It can however be renewed on mutual consent for a similar or lessee period. The employment will terminate at the end of the contract period. If the employer terminates the contract for reason other than those specified in Article 120, he would be liable to pay compensation to the employee. This compensation shall be determined on the basis of the wages due for a period of three months or for the remaining period of the contract whichever is less, unless an article in the contract states otherwise. If the contract is cancelled by the employee for reasons other than those stipulated in Article 121, he will be liable to compensate the employer against any loss resulting from its cancellation. The amount of compensation shall be computed on the basis of half-a-month's wages for three months or for the remaining period of the contract whichever is less, unless the contract states otherwise. The characteristics of an unlimited contract are as follows: The contract will state a commencement date but no completion date i.e. the date on which the contract will end. A contract will be considered "unlimited" if it is a oral contract or if it is not for a specified period or it had been for a specified period and the parties continue to act on its terms & conditions after its expiry, without any written contract specifying the completion date, or if the purpose of the employment is to complete work not estimated within a specified time-frame or which is by very nature not renewable. The contract may be terminated on a mutual agreement by either of the parties by giving the other 30 days notice of termination. The contract may be terminated for a justified cause at any time on giving 30 days notice of termination by either party to the other. The notice period may be less for an employee working on daily basis. The notice period may be extended for a period exceeding 30 days. It would then not be acceptable for the parties to waive this notice period.

The employees wages during the notice period should be paid in full for the entire notice period served. In the event that no notice had been given, the person who ought to have given the notice must compensate the other with the payment of a month's wage in lieu of the notice period. As per Article 120, the employer may terminate the employee's contract without notice. The employee may terminate the employment contact without notice in accordance with Article 121. The employee will be entitled to compensation if the termination of the contract had been for an unjustified cause. The court may award the employee damages, against the employer, provided that the damages so awarded does not exceed three months wages of the employee (calculation to be based on the last wage paid to the employee). The compensation for damages if any, awarded to the employee for unreasonable dismissal, will be without prejudice to the employee's entitlement of end-of-service gratuity and payments in lieu of notice, if notice had not been properly given. 3. What information should be stated in an employment contract? The only information required by law to be specified in the employment contract is as follows: Date of the employment contract Date of commencement of the employment contract Nature of the contract (limited or unlimited) Designation/category Term of the contract (for limited contracts) The compensation package

Visit visa to the UAE will cost Dh500 from August


A visit visa will cost Dh500 across all the emirates from August 1, with 16 new types of visit visas introduced for specific uses. By Rayeesa Absal, Staff Reporter Published: 15:44 June 8, 2008 Abu Dhabi: Visit visas to the UAE will cost Dh500 from August 1 following the revamp of the structure and charges of entry documents in line with a cabinet decision, a senior official said. New types of visas have also been introduced.

"Visit visas valid for 30 days will cost Dh500. This cannot be renewed," said Lieutenant General Mohammad Salem Al Khaili, Director-General of Federal Naturalisation and Residency Department. "If a person wishes to stay for an extended period, he or she must obtain a visa valid for 90 days which costs Dh1,000." A health insurance policy is mandatory for visitors and a Dh1,000 deposit will be collected by the department before issuing visas. Residents can apply for the visa for their spouse or blood relatives. Sponsoring other relatives will need the approval of senior officials. Only UAE nationals can sponsor friends. Multiple entries Some 16 types of visit visas have been defined by the FNRD specifying the reason for visit, such as education, treatment, or for participating in an exhibition or conference. "A multiple entry visa has also been introduced. The visa [costing Dh2,000] is valid for six months, but a person can stay in the country only for 14 days at a stretch, " said Al Khaili. "New types of visas are introduced to keep up with the fastpaced development of the country," he added. Student visit visas will cost Dh1,000. To obtain this, a person must be registered in one of the universities in the UAE and must obtain health insurance. Additionally a refundable deposit of Dh1000 must be paid. Those wishing to undergo treatment must take visit visa for treatment purpose that costs Dh1,000 for 90 day duration. This can be renewed for a similar period at Dh500. Those visiting to attend conferences or exhibitions can obtain a visa for this purpose at Dh100. One-month long tourist visas will cost Dh100, as before. This may be renewed only once. Transit visas will cost Dh100 while mission visas will cost Dh200. Apart from the 16 new types of visas, complimentary visit visas could be issued by all government departments free of cost to delegates, dignitaries and others.
VISA FEES Type of visa Short Entry (visit) Visa Long Entry (visit) Visa Fees in Dhs 500 (1 month) 1,000 (3

Multiple Entry Visa Entry Visa for Study Renewal of Study Visa Entry Visa for Medical Treatment Renewal of Medical Treatment Visa Entry Visa for Expos and Conferences Tourism Entry Visa Renewal of Tourism Visa Entry Visa for GCC State Residents Renewal of GCC State Resident's Visa Entry Visa for GCC State Resident's Companions Renewal of GCC State Residents Companions' Visa Mission Entry Visa Transit Entry Visa

months) 2,000 1,000 500 1,000 500 100 100 500 100 500 100 200 200 100

Visit visas: New entry permits only a month after exit


A visitor needs to get a new entry permit to re-enter the country once he or she leaves the country for any destination. The new entry permit will be issued only after one month from the date the visitor leaves the UAE By Bassma Al Jandaly, Senior Reporter Published: 00:00 January 17, 2010 Dubai: Visas for visit, transit and tourism are valid only for a single entry into the UAE, said a senior official at the Ministry of Interior, adding that visitors cannot return using the same permit even after a trip to a neighbouring country. Major General Mohammad Ahmad Al Merri, Director-General of the Dubai General Department for Residency and Foreigners Affairs, told Gulf News: "A visitor needs to get a new entry permit to re-enter the country once he or she leaves the country for any

destination. The new entry permit will be issued only after one month from the date the visitor leaves the UAE." Major General Al Merri was responding to a question about visitors who face difficulties in returning to the UAE after a short sightseeing trip to Oman or after leaving in a hurry for a meeting in Bahrain. They cannot re-enter the UAE immediately since a new visa will be issued only after a gap of at least one month. Application The rule applies even if the visitors leave the country before the expiry of their entry permits, he said. "They have to wait for one month before applying for another entry permit." Major General Al Merri said this happens to some people who arrive on tourist or visit visas to see family or friends or visit the country as tourists. "They stay here for few days and then decide to go to Oman, Bahrain or any nearby country. These people believe they can return to the UAE using the same entry permit as they stayed here only for a few days. "They think the entry permit is still valid since they did not use it till the expiry date," he said. Major General Al Merri said the department, however, could take into consideration any exceptional circumstances pertaining to a particular visitor. But such a decision is taken on case-by-case basis. "We want to make it easy and enjoyable for people who want to visit our country. But they should adhere to the rules," he said. Multiple entry Multiple entry visas are an option for businessmen who are frequent visitors to the UAE and who have a relationship with a reputable company here. This visa is valid for six months from the date of issue and costs Dh1,000. However, each visit must not exceed 30 days. Visit, tourist and transit visas are only for single entry.