uae labour law section 16

7/22/2019 UAE Labour Law Section 16

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UAE Labour Law Section 16 - Payment of

Gratuity

http://gulfnews.com/uaessentials/ask-the-law/uae-labour-law-section-1-introduction-1.1208192

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 unlimitedcontract.

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 ofemployment 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 inservice 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?


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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 basisfor 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 aswage 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 onwhich 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 forcethereafter.

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 tothe 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 continuousservice 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.


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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 sametime, 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 theemployment contract for the proceeding period?

The employer and the employer may agree to pay at a certain time the gratuity to the employeefor the years during which the employee served the employer, and to start with a new contract forthe 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 continuousperiod 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 thethird 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 hasviolated the provision of the law as stipulated above.

13. When does gratuity become due and payable?


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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 prioritydebts?

The employee's wages, overtime, and any other benefits, including the end of service gratuity, isconsidered 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'tget NOC. As I know, once my work permit is cancelled, there will be a 6-month ban. I am willing to paywhatever 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 withoutthe 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 toanother sponsor after obtaining No Objection Certificate from the current sponsor, and maybe the questioner couldoffer the company a sum of money for this Certificate as compensation for the visa expenses incurred by thecompany.

A reader from Dubai asks: I've worked with my present company for 10 months and found a new job. I can'tget NOC. As I know, once my work permit is cancelled, there will be a 6-month ban. I am willing to paywhatever 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 withoutthe 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 toanother 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 thecompany.

III. EMPLOYMENT CONTRACT

1. What are the permitted tenures of employment contracts?


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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 aspecific 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 thecontract 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. Theamount 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 workingon 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.


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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 mustcompensate 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 anunjustified 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 inlieu 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 contractNature 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 officialsaid. New types of visas have also been introduced.


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"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 relativeswill 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 depositof Dh1000 must be paid.

Those wishing to undergo treatment must take visit visa for treatment purpose that costsDh1,000 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 atDh100.

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 visaFees in

Dhs

Short Entry (visit) Visa500 (1month)

Long Entry (visit) Visa 1,000 (3


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months)

Multiple Entry Visa 2,000

Entry Visa for Study 1,000

Renewal of Study Visa 500

Entry Visa for Medical

Treatment1,000

Renewal of MedicalTreatment Visa

500

Entry Visa for Expos andConferences

100

Tourism Entry Visa 100

Renewal of Tourism Visa 500

Entry Visa for GCC StateResidents

100

Renewal of GCC StateResident's Visa

500

Entry Visa for GCC StateResident's Companions

100

Renewal of GCC StateResidents Companions' Visa

200

Mission Entry Visa 200

Transit Entry Visa 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, saida 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


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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," hesaid.

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 andwho 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.

uae labour law section 16

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