I have been working for a company in the UAE for the past eight years, but things are not looking good so I plan to leave. I would like to know if there is a possibility that the company can refuse to pay me the end of service gratuity if I resign. A friend told me you get less if you choose to leave and some companies can refuse to pay. What are my options? JA, Abu Dhabi
While there can be restrictions if someone leaves service within five years of service, anyone on an unlimited contract will not be financially penalised if they resign provided they give 30 days’ notice, or more if required per their contract. Anyone who resigns with less than five years of service will have the end of service gratuity payment reduced but per Article 136 of UAE Labour Law, there is no penalty thereafter. The payment is 21 days of basic salary for each of the first five years of service and then 30 days thereafter, always pro-rated. If an employee is on a limited/fixed contract and resigns within five years the gratuity is forfeit, but this restriction does not apply after five years of service. The only reason why a resigning employee, in this set of circumstances, may not receive an end of service gratuity would be if there is a pre-agreed alternative arrangement such as an employee pension or savings plan. This must be by prior agreement and the employee still has an option regarding which they prefer as set out in Article 141: “In any establishment where a pension or security schemes or similar schemes are maintained, the employee who is entitled to retirement pension may select either this latter or the prescribed gratuity or whichever from both is more favourable to him.”
Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with more than 20 years’ 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