'How should my end-of-service benefits be calculated?'

Under the UAE's labour law, end-of-service gratuity payments are based on an employee's basic salary. Photo: The National Archives

Question: I will be retiring shortly after working for my employer for 25 years. I understand from having looked at the UAE labour law that I am entitled to 30 days of pay for each year of service.

I am on a basic salary of Dh45,000 ($12,253) per month and I know that allowances are not included. By my calculations, I am owed an end-of-service gratuity of Dh1.12 million, but the company is saying that they only have to pay me Dh1.05 million. Can you clarify who is right in this case?

Can you also confirm when it has to be paid as the company wants to delay making the full payment until the end of October. NC, Dubai

Watch: UAE launches new gratuity scheme

Answer: If an employee has worked for more than one full year but fewer than five years, they are entitled to full end-of-service gratuity payment based on 21 days of basic salary for each year of work.

After five years of service, this increases to 30 days of basic salary for each year thereafter.

NC has confirmed that he started working for the company on October 3, 1998, and that his last day of service will be on September 29 of this year. He has only taken approved annual leave, so there are no unpaid days of absence to be deducted.

Use this tool to calculate your gratuity pay

It appears that NC has calculated the amount based on 30 days of salary for all of his years of service, but this only applies from the sixth year onwards.

In this case, the employer is correct.

For anyone who has worked for a company for a long time, it is worth noting that there is an upper limit for gratuity payments in the labour law.

Article 51, clause 6, states: “It is required based on the foregoing that the end-of-service benefits for the foreign worker in its entirety does not exceed two years’ wage.”

This means that the employer can cap the amount payable at an amount equivalent to two years of basic salary, although if the calculation exceeds this amount, they can choose to pay the higher amount should they wish to do so.

The new labour law, which came into effect in February last year, also specifies a time limit as to when an end-of-service gratuity should be paid.

Article 53 of the law states: “The employer shall pay to the worker, within (14) fourteen days from the end date of the contract term, his wages and all his other entitlements stipulated herein and resolutions issued for its implementation, the contract or the establishment’s by-laws.”

This makes it clear that NC's employer should not delay making the payment. If it fails to pay NC in a timely manner, he can register a case against the company with the Ministry of Human Resources and Emiratisation.

Q: I am a clerk at a company and I work long hours because we are busy and my manager says I have to get the work done. I asked about overtime pay, but was told no. Am I entitled to be paid for working for 10 hours each day? CV, Sharjah

A: The UAE's labour law is clear about the number of hours that employees are permitted to work each day and each week.

Article 17.1 of the labour law states: “The maximum normal working hours for workers shall be (8) eight hours per day or (48) forty-eight hours per week.”

While certain categories of employees can be required to work for nine hours per day, the role of clerk does not fall under this. Therefore, if CV is asked to work for more than eight hours a day, they are entitled to be paid overtime.

This is set out in Article 19 of the labour law, which states: “1. The employer may instruct the worker to work overtime over the normal working hours, provided that they do not exceed two hours per day. The worker may not be instructed to work for more than that period, except in accordance with the conditions and rules specified by the Implementing Regulation hereof. In all cases, the total working hours shall not exceed (144) one hundred and forty-four hours every (3) three weeks.

“2. If the work conditions necessitate that the worker works for more than the normal working hours, the excess period shall represent overtime, for which the worker shall receive a wage equal to the wage corresponding to the normal working hours, which is calculated according to the basic wage plus an increase of not less than (25%) twenty five per cent of that wage.”

Should the employer fail to pay overtime, the employee can register a case with the Ministry of Human Resources and Emiratisation.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 30 years’ experience. Contact her at [e-mail]. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only