Abu Dhabi, UAETuesday 4 August 2020

'Am I entitled to a gratuity as a contractor?'

The Fujairah resident has been seconded to a company in the Northern Emirates for more than three years

 The gratuity payment is a benefit for expatriate employees as set out by the law. Silvia Razgova / The National
 The gratuity payment is a benefit for expatriate employees as set out by the law. Silvia Razgova / The National

Should I receive a gratuity as an expatriate contractor? I was seconded to a big company in the Northern Emirates by a supply company that pays my salary and sends an invoice to the UAE company, which it has a service agreement with, every month. My contract with the supply company is a simple day-rate contract.

I have decided to retire after three years and four months of service. My contract states that the lump-sum daily rate is inclusive of all costs and the gratuity. I signed it without knowing that the gratuity is mandatory after a full year of service. Can I request this benefit from the supply company and ask them to bill the other company for my last month? It seems strange they are allowed to offer a contract with no provision for the payment after more than three years of employment. TP, Fujairah

The answer to this question centres around who TP’s actual employer is.

If TP is paid by the supply company and it provides the residency visa, they will be deemed to be the employer at law and not the company he is seconded to.

That second company is only responsible for the agreed fees invoiced to them. TP said he signed a standard UAE employment contract and a separate agreement with the sponsoring employer with terms that stated a daily rate of pay that included a gratuity paid on an ongoing basis.

The sponsoring employer is a mainland company, not a government or semi-government entity, and thus the UAE’s Labour Law applies.

The gratuity is a benefit for non-Emirati employees as set out in law.

This is based on a basic salary and is dependent on the type of contract – whether limited or unlimited – and period of service. The amount to be paid varies if an employee resigns with fewer than five years of service.

It is a standard clause in the contract that is lodged with Ministry of Human Resources and Emiratisation.

While employers are permitted to offer enhanced terms to employees, they cannot offer reduced terms of their choosing, even if the employee agrees to this.

If an employer has a retirement scheme, this can be offered as an alternative benefit, but specific rules will apply.

In this case, I believe the specific wording will be relevant.

Although an employer cannot contract around the law and fail to pay a gratuity that is owed, the outcome for TP may change if it can be proved that the benefit is being paid on an ongoing basis – even if this is against the spirit of the law.

TP must ask for guidance from a legal counsellor at the ministry to find out if he has a case against the sponsoring employer.

I lost my job in February of this year. My residency visa could not be cancelled as I have an outstanding police case in Sharjah related to property. What can I do to ensure that the visa is cancelled as I am owed money by my employer? They will only pay it in full once my visa is cancelled. I cannot secure another job either until it is cancelled. AJ, Sharjah

For a visa to be cancelled in the UAE, any outstanding police cases or unpaid fines will need to be settled.

This was confirmed by the Ministry of Interior last year.

The computer systems for the General Directorate of Residency and Foreigner Affairs, which has divisions in each emirate, are linked not only to the police but also to other government departments.

This means the information is centralised and an outstanding issue or fine in any emirate can prevent several actions, such as the issuance of a new work-related visa or even one’s bid to leave the country.

As AJ has an outstanding police case, she must settle this with the party that registered the case against her. That is the only course of action in any police case.

If money is owed it will need to be paid, or an agreement reached so that the other party withdraws the case filed against her.

Once this has been done, the existing visa can be cancelled, and any new employer can apply for a new residence visa and work permit.

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

Updated: July 5, 2020 02:31 AM

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