Abu Dhabi, UAETuesday 12 November 2019

Am I entitled to a gratuity payment if I left the company without giving notice?

The Abu Dhabi employee left the company and later returned causing confusion over the end of service payment

The Abu Dhabi resident rejoined the company at the start of this year but never received a payout for the earlier four-year stint. Silvia Razgova / The National
The Abu Dhabi resident rejoined the company at the start of this year but never received a payout for the earlier four-year stint. Silvia Razgova / The National

I worked for a private company in Abu Dhabi from April 2013 to March 2018. I went on holiday to my home country but did not return on time so the company sent me a termination letter. I have since re-joined the company from January and I would like to know if I am eligible for any end-of-service gratuity for when I was with them before. JS, Abu Dhabi

When an employee fails to return to work after annual leave, or leaves service without giving proper notice, they can be marked as an absconder. It appears that as JS did not return, and so was in breach of contract, he was sent a termination letter which was valid per Article 120 of UAE Labour Law which states: “The employer may dismiss the worker without prior notice in any of the following cases: Should he be absent without valid cause for more than 20 non-consecutive days in one year, or for more than seven consecutive days.” The law goes on to say, in Article 139: “The worker shall be deprived of his end-of-service gratuity in the following two cases: Should he be dismissed from service for any of the reasons set forth in Article 120 hereof, or should he leave his employment in view of avoiding the dismissal therefrom in accordance with the said Article.”

This confirms that JS is not entitled to an end-of-service gratuity for his previous time with the company, as it is forfeited due to the circumstances of his unauthorised departure.

My employer claims they do not have a placement for me anymore and I was offered an 18 days of local leave from March 1 to 18. I am struggling to find new employment and have decided to resign. I joined the company on June 16, 2014. How should I expect my gratuity to be calculated? My basic salary was Dh2,000. RA, Dubai

RA has not clarified what he means by local leave but it seems this may be unpaid. A company cannot just decide an employee must take leave and the employee should be paid in full unless they agree to unpaid leave. If there is no longer a role for RA in this company, the employer should terminate the position and give him 30 days’ notice, or more if required in his contract. All employees must be paid in full for the notice period, whether they are actually working during this period or not. I understand RA is on an unlimited contract.

It is better for RA to be terminated by the company rather than for him to resign, as if he leaves of his own accord it will reduce the gratuity amount he is due. This is clarified in UAE Labour Law and Article 132 says: “The worker having spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service. The days of absence from work without pay shall not be included in the calculation of the period of service, and the gratuity shall be calculated as follows: 1) The wage of 21 days for each of the first five years of service. 2) The wage of 30 days for every additional year. Always provided that the total gratuity does not exceed the wage of two years.”

The situation will change if an employee resigns with fewer than five years of service. This applies if RA leaves before June 16. This is set out in Article 137 of the law: “Should the worker bound by an employment contract with undetermined term leave his work by his own choice after a continuous service of one year at least and three years at most, he shall be entitled to one-third of the end-of-service gratuity set forth in foregoing Article. Should his continuous service be of three years at least and five years at most, he shall be entitled to two thirds of the said gratuity, and to the full gratuity should it exceed five years.”

To clarify, if RA resigns now, he will be entitled to two-thirds of the full gratuity figure, so calculated as 14 days per year of service, rather than at 21 days. Any partial years must be paid pro-rata, per Article 133: “The worker shall be entitled to a gratuity for the served fraction of a year, provided that he completes one year of continuous service.”

In each case, the end-of-service gratuity is calculated on the basic salary only and does not include any allowances or bonuses. The final payment must also include any days of annual leave that have accrued up until the final day of service but have not been taken.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 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: March 16, 2019 03:21 PM

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