Abu Dhabi worker with pay rise to Dh28,000 told gratuity will be based on first salary

Keren Bobker advises an employee who is at loggerheads over his end of service gratuity.

I have been with my employer for over five years but have just resigned. Over time my salary has increased from Dh22,000 per month up to Dh28,500. Whenever it has increased I have just been told the new amount in an email and the amount paid to me each month has then increased. At no point has my salary ever included any allowances and there is nothing about any allowances in my original contract. When discussing the amount to be paid to me on leaving as my gratuity, my manager is saying that they will pay me an amount based on the original salary as that is all there is in writing and they want to call the increases allowances. Is he correct as this seems unfair, as my salary is now quite a bit higher? NS, Abu Dhabi

In this case the employer is not correct as it is stated in Article 134 of UAE Labour law that “the end of service gratuity shall be computed on the basis of last wage which the employee was entitled to, in respect of those drawing their salary per month”. While the Ministry of Labour will usually consider the contract that is lodged with them to be binding, if an employee has received salary increases that are clearly evidenced by both emails and actual payments as in this case, the current salary is the one to be used when calculating the end of service gratuity. While allowances are excluded, per another section of Article 134, “the wage which is considered as basis for computation of the end of service gratuity shall not include any­thing given to the labourer in kind, housing allowance, transport allowance, travel allowance, overtime allowance, representation allowance, cashier’s allowance, children education allowance, recreation and social services allowance or any other allowances”, this is not applicable in this case as at no point before resignation was it communicated that any increases were to be any kind of allowance. The final salary of Dh28,500 per month should be used for the calculation of the end of service gratuity.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at [e-mail]. Follow her on Twitter at @FinancialUAE.

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