‘Will signing a new contract with my existing employer affect my gratuity payment?’

The employee should clarify the status of end-of-service payments before accepting any change in employment contract terms

Close up of woman signing contract in job application form. Getty Images
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I have been working for a private company in Jebel Ali Free Zone (Jafza) for eight years. Currently, I am on a non-local contract but the company wants to put me on a local contract. They have sent me the new terms of the contract, which reduces my base salary. This will affect my gratuity. Am I within my legal rights to ask the company to pay my gratuity now before I start the new contract? AB, Dubai

Jafza follows the UAE Labour Law, Federal Law No. 8 of 1980, so the standard provisions apply. Anyone who is employed in the UAE should be on a UAE contract of employment and this should state any terms of service in addition, but not contrary to, the Labour Law.

No employer is permitted by law to change the terms of a contract of employment without the written agreement of the employee. This has long been the case but was clarified in several ministerial decrees that came into effect in January 2016. Ministerial Decree 764 of 2015, Article 4 states: “No change may be made to the contract signed by the worker hereunder without the worker’s consent and provide such change may not prejudice the worker’s rights and only after the ministry’s approval of such change.”

This makes it clear that any change can only be made by agreement. If an employer forces such a change, the employee has the right to make a formal complaint to the Ministry of Human Resources and Emiratisation. If an employee is terminated due to non-acceptance of an unagreed change of contract, this will be deemed arbitrary dismissal and compensation can be claimed.

Should AB decide to accept a change of terms, he should raise the matter of the end-of-service gratuity before signing any documents. As gratuity is calculated on final salary only, he would be agreeing to a reduced payment on leaving service.

He can opt for one of these two options: Agree on payment of gratuity that has accrued to date, or get a full written agreement on a company-stamped letterhead that he will receive an amount no less than that accrued under the previous contract for the first eight years of service. If he requests payment of the gratuity accrued to date, the employer could claim that the new contract is a new start of service and as the gratuity calculation increases after five years of service only, this will reduce future entitlement.

I work for a logistics company and it is a rather busy time at work now. Although it is normal to work long hours, it is getting very difficult now. We usually start at 8am, have a short lunch break and finish at 6pm. However, we are now being asked to work until 8pm on certain days. Is this right and do we have to stay so late? Should we be paid for doing overtime at work? Please advise. BE, Sharjah

If overtime is worked between the hours of 9pm and 4am, the increase in pay is 50 per cent. Furthermore, only two additional hours a day are permitted

The UAE Labour Law specifically states the working hours that should be adhered to for most employees. This is in Article 65, which states: “The maximum number of ordinary working hours for adult workers shall be eight hours per day, or 48 hours per week. The number of hours may be increased to nine hours per day for people employed in trade, hotels, cafeterias, security and other jobs, whose addition may be made by virtue of a decision from the minister.” This excludes a meal break.

Overtime is permitted by law, but rules apply. Article 67 states: “Should the work circumstances require the carrying out by the worker of a work for more than the ordinary working hours, the additional period shall be deemed an overtime, for which the worker shall be paid a wage equivalent to the ordinary hourly wage with an addition of at least 25 per cent of the said wage.”

Note that if overtime is worked between the hours of 9pm and 4am, the increase in pay is 50 per cent, as per Article 68. Furthermore, only two additional hours a day are permitted as per Article 69 “unless such work is necessary for the prevention of the occurrence of a colossal loss, a serious accident or the removal or mitigation of the consequences thereof”, which is not the case here.

BE and his colleagues are being asked to work more than the permitted hours as per the UAE Labour Law. This can be explained to the employer, as it is not uncommon for some to be unaware, and overtime pay requested. If the law is not followed, employees can file a case with the MoHRE.

One final point to be aware of is that these rules do not apply to “persons occupying high-ranked managerial or supervisory positions” as per Article 72, which refers to managers, supervisors and those in senior roles in a company.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 25 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