I am confused about the end of service gratuity. I have resigned from my company where I had worked for 3.2 years on an unlimited contract. I understood that I would get 21 days for every year (ie 3.2 x 21 equals approximately 67 days' pay) and then that this figure would be reduced by a third to give approx 44 days' final gratuity. Instead, the company says that I am only entitled to seven days (ie 21 reduced by 2/3rds) for each of the first three years, plus a couple of days for the last 0.2 year, based on a proportion of 14 days for that year (ie 21 reduced by 1/3rd). This works out to about half the sum I was expecting. I'd like to know which of us has got this wrong, based on the local labour laws. PD, Sharjah
The wording set out in law is clear as to how the benefits should be calculated and this is what UAE Labour Law says on the topic in Article 137: “if an employee under a contract with unlimited period has left his work at his own option after a continuous service of not less than one year and not more than three years, he shall be entitled to one third of the end of service gratuity provided for in the previous article. If the period of his continued service is more than three years and less than five years he becomes entitled to 2/3 of the said gratuity, but if his continued service exceeds five years, he becomes entitled to the entire gratuity.” This means that anyone who has worked continuously for a company between three and five years and decides to leave of their own accord is entitled to receive 2/3rds of the full gratuity amount due. There are not two separate calculations and so the employer is wrong in this case. I suggest you go back to them, quoting the exact words of the law. You should not sign any paperwork agreeing to accept any lesser payment and if the company refuses to pay the correct amount, the Ministry of Labour can confirm the law to the company.
Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 years of experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE
The advice provided in our columns does not constitute legal advice and is provided for information only. Readers are encouraged to seek appropriate independent legal advice
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