End of Service Benefits Comparison of Gratuity Under the UAE Labor Law and DIFC Laws

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December 01, 2014

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Employees are eligible for Gratuity at the end of completing a full year 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.

Recently, the UAE government as well as the DIFC have enacted new laws regarding employment and labour, which are strikingly similar in terms of end-of-service payments.

Both the DIFC Law and the UAE Labour Law No. 33 of 2021 take an almost identical position on the issue of severance pay.

As per UAE Labour Law, a foreign worker will be entitled to gratuity if he has completed one year of service.

Under the UAE Labour Law, gratuity will be calculated for 21 days for each year of the first five years of service, and for every succeeding year, it will be calculated for 30 days. Under the DIFC Employment Law as well, gratuity will be paid for 21 days for each year of the first five years, before the commencement date of the Qualifying Scheme. For every subsequent year, it will be calculated for 30 days before the commencement date of the Qualifying Scheme.

Under the UAE labour law as well as the DIFC employment law, the gratuity should not exceed two years’ remuneration.

Under the DIFC Law, Article 63(1), “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.”

Where employment is terminated by the employer, the gratuity will be calculated up to the termination date, and where the employee terminates the employment, gratuity will be calculated up to the notice period that the employee would have been required to give.

Both the UAE Labour Law and the DIFC law state that gratuity should not exceed the annual wage for two years.


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Comments

The information is really useful but if complained in MOL and the judgement will in my favor. The employer still not ready to pay settlement than which legal step should be taken
Sajid
2020-11-12
For all employment disputes (except for Freezone companies), the complaint is to be filed with the Ministry of Human Resources & Emiratisation ("MOHRE"). If the complaint is filed by the employee, the ministry's labor section will contact the employer and will put forward the complaint and would try to resolve the dispute between both parties. In the instance, no resolution is achieved the ministry will forward the matter to the Dubai Courts. You will be required to file your claim before the labor court either by yourself or by appointing a lawyer on your behalf.

As per your query, in the instance, you receive a favorable judgment, the next step is to file for the execution of the judgment in the court.

If you prefer to receive more detailed advice, please feel free to contact us at any time and we would be happy to arrange it for you.   Dr. Hassan Elhais
Thank you for sharing this Dr. Hassan Elhais, I am really appreciate this, at least i know the basic knowledge / rights of an individual employee and eligible to get their EOSB / gratuity to the employers after completing their more than 2 years of service or probation. I already raised this issue to your team sir. More power to you Dr. Hassan Elhais.
Honesto Torcuator Jr
2020-11-01
Thank you very much.   Dr. Hassan Elhais

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