Understanding When Gratuity Payment May Be Withheld in the UAE

The UAE Laboure law protects the end of service gratuity. However there are some reasons that employers have the right to not paying the gratuity. What are those reasons, and what are the legal actions in such cases? These are crucial questions that we will answer in in this bolg. Do not miss reading it and if you need to consult a labor lawyer contact us.

What is the End-of-Service Gratuity Under the UAE Law?

The gratuity is a financial right legislated by the law, which the employer owes to the employee under specific conditions. The employer is obligated to pay this amount to the employee, or those he is responsible for (such as his children, spouse, or parents), upon the termination of their contract. The value of this gratuity is determined based on the number of years the employee has served, the reason for the termination of the employment, and the monthly salary received during the period of employment.

Calculating Your End-of-Service Gratuity in the UAE

In some texts and references, the end of service benefits is mentioned alongside other terms like retirement gratuity and savings gratuity. These expressions intersect in the idea that they represent a certain financial compensation for a specific reason, but our focus here is on the end of service benefits

For employees in the private sector in the UAE, the value of the end of service benefits is also based on the duration of employment, their wages, and the nature of their work. Employees receive 21 days’ wages for each year of service, and after completing five years, they receive a full month’s salary for each subsequent year.

UAE law specifies that an employee is entitled to an end of service benefits upon the termination of their service. This entitlement also applies to full-time expatriate workers who have completed one year or more in service.

Additionally, the calculation of the gratuity for part-time workers, job sharers, or any other type of employment other than full-time is as follows:

• The number of hours specified in the contract divided by the number of hours in a full-time contract multiplied by one hundred equals the percentage multiplied by the value of a full-time worker’s gratuity.
• In cases of temporary work lasting less than a year, the end-of-service gratuity does not apply.
• Other legal articles have discussed the end of service gratuity in more detail, such as in the case of an employee’s death, death due to work, and entitlement in cases of unfair dismissal. Therefore, if you face any such situation and need legal advice, do not hesitate to contact us through the WhatsApp button at the bottom of the screen.

There might be a father claiming the rights for his son who died due to work, among other scenarios. Thus, with our extensive experience in UAE law, we are fully equipped to assist you, regardless of the situation.

Eligibility for End-of-Service Gratuity in the UAE

While the UAE Labour Law mentainsend-of-service gratuity, specific criteria determine employee eligibility. Let’s delve into who qualifies for this benefit and what are the exclusions.

• Employees whose service at the workplace is not less than one year of continuous work.
• Those whose employment has ended due to the expiration of the contract or who have resigned in a manner compliant with applicable regulations.
• Employees who have served their workplace for a total period of not less than one year in temporary employment systems.

When is Gratuity Not Payable in the UAE?

The employer have the right to not paying the gratuity in h following cases:

1. Less than one year of continuous service.
2. Dismissal due to violations like intoxication, assault, unauthorized absence.
3. False identity/nationality, forged documents.
4. Termination during or at the end of probation.
5. Causing substantial material loss proven by the employer within 48 hours.
6. Ignoring clearly displayed written safety instructions (verbal instructions for illiterate employees).
7. Contractual Breaches.
8. Divulging company secrets.
9. Final judgment for offenses impacting honor, honesty, or public morals.
10. Being intoxicated or under the influence of drugs during work hours.
11. Assaulting the employer, manager, or colleagues.
12. Unauthorized Absence more than 20 intermittent days or 7 consecutive days within a year.

You might need to read: Winning Your Wrongful Termination Case in the UAE

Procedures for obtaining the end of service benefits under UAE Labour Law:

Upon the completion of the last working day, the employer is obligated to pay all financial entitlements of the employee, including the end of service benefits. In cases of unfair dismissal, certain legal procedures are required.

Once it is proven in court that the employee was dismissed on unlawful grounds, the court may order the employer to pay financial compensation for the damages suffered by the employee due to the unfair dismissal, in addition to the end of service benefits, provided the previous conditions are met!

Between a person who knows and one who does not, between one whose service has ended and finds himself without any financial return despite his entitlement and another who has benefited from all his rights enshrined by the UAE Labour Law,

lies a secret in: relying on legal experts. Therefore, do not hesitate to entrust us with your cases. We will help you by connecting with those who hold the reins to the problem you are facing, because your case is our case too.

Mohamed Diab

Senior Legal Consultant with extensive experience in providing specialized legal advice in various fields within the United Arab Emirates. He specializes in commercial, criminal and personal status law cases, and works on representing individuals and companies in complex cases and legal disputes.