x Abu Dhabi, UAEThursday 18 January 2018

Dubai worker queries end of service gratuity payment after switch to full-time

Keren Bobker advises an employee who changed from working 25 hours a week to a 40-hour week but has been told the settlement will be pro-rata.

Downtown Dubai. Keren Bobker advises a resident who is having problems with the end of service gratuity laws. Sarah Dea / The National
Downtown Dubai. Keren Bobker advises a resident who is having problems with the end of service gratuity laws. Sarah Dea / The National

I have been working for a company for a little over four years. For the first three years, my contract was for a 25-hour working week, but in November last year I moved to working full time. Both my contract and salary were amended to reflect this. One of my main motivations was that I found myself actually working up to 40 hours each week, but only being paid for 25. I will soon come to the end of my notice period. I have yet to receive confirmation of my final settlement, but the finance director has indicated that in my case the calculation is more complex as he needs to calculate the end of service gratuity on a pro-rata basis. My understanding is that any gratuity calculation is based on my final salary. Can you advise on the legal position and whether I am obliged to accept a pro rata calculation? While I usually worked far more than 25 hours I was not paid overtime. I have been a loyal employee who worked hard when the company was growing without demanding extra pay, so it seems unfair that I should be short-changed now. CH, Dubai

You are right in that it clearly states in UAE Labour Law that the end of service gratuity is based on final salary. Article 34 states: “Without prejudice to the provisions of some laws regarding the granting of pensions and gratuities to employees of some establishments, the end of service gratuity shall be computed on the basis of last wage which the employee was entitled to, in respect of those drawing their salary per month”. There is no reference to a situation such as yours, but if it went as far as a complaint to the ministry I have no doubt that you would win, especially if you can prove the actual hours worked. Under law, even if someone’s salary doubled only a month before they resigned, it is clearly the final salary figure that must be used for the calculation.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 year’s 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. Readers are encouraged to seek appropriate independent legal advice

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