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December 01, 2014|
Employees are eligible for Gratuity at the end of completing a full years of service. This gratuity is calculated as 21 days of salary. Salary in this case excludes any allowances for housing or car etc and considers the basic salary of the employee.
Both the DIFC Law and the UAE Labour Law No. 8 of 1980 take an almost identical position on the issue of severance pay. The DIFC laws also calculate the gratuity as 21 days of basic salary. The basic salary shall not include any housing or other allowances.
Under the DIFC Laws, an employee does not have to pay gratuity if an employer has been terminated under Clause 59 A of the law which reads “An employer or an employee may terminate an employee’s employment for cause in circumstances where the conduct of one party warrants termination and where a reasonable employer or employee would have terminated the employment.”
Similarly, under the UAE laws, the employer does not have to pay gratuity to an employee whose employment has been terminated for reasons specified in Article 120 of the Labor law of UAE Federal Labour Law no. 8 of 1980 which include the following:
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