Should companies still pay the gratuity benefit when an employee dies?
The deceased worker's employers are unsure how much they are liable for or who to transfer the money to
One of our employees died recently and as a company we are trying to work out what payment his family is entitled to. We are quite a small company so we, as management, have not dealt with this kind of issue before. Therefore, we are not sure what we need to do. What happens to the end-of-service gratuity payment that built up over his time with us? Is that lost on death or does it still have to be paid, and if so, to whom? We are happy to pay this but are unclear about our legal obligations and want to ensure we do everything properly. SA, Dubai
Should an employee die, any accrued gratuity is payable as if the person had been made redundant, without any reduction. This should be calculated to the date of the employee's death, which will be deemed the final date of service. The total payment, which is any unpaid salary, the gratuity, plus any days of annual leave owed, are payable to the individual’s beneficiaries. This is set out in Article 136 of UAE Labour Law: "in the event of the worker's death, his end of service gratuity shall be paid to the beneficiaries thereof". This is also covered in Federal Law no 7 for Pension and Social Security. Article 42 of this states, "in the case of death of an insured person, the remuneration payable to him against the period of service shall be paid to his beneficiaries …" It goes on to say, "in the case of non-existence of such beneficiaries, the remuneration shall be distributed in accordance with the rules of succession in Islamic Sharia". This is essentially saying that the end-of-service gratuity can be paid to the deceased employee’s preferred beneficiaries but if no instruction exists, or if this is unclear, the inheritance provisions of Sharia law should be applied. If the deceased had a valid UAE will then the provisions in that regarding beneficiaries will apply.
To avoid any confusion in the event of the death of an employee, all employers should keep a record of their employee’s next of kin and also who is the preferred beneficiary in respect of any monetary payments.
I have resigned from my job and am serving a notice period. Since submitting my resignation in our system, not one of my managers has approached me to discuss why I resigned. During this period, I have to look for another job, so sometimes I need to go for interviews. Can I go to interviews during the day and not show up to work as none of my managers seem to care about my resignation? I also have extra hours owing to me and holiday days I have not used up. Will I be paid for these? LL, Dubai
An employer is not obliged to ask why an employee is leaving the company and it tends to be the larger companies that have a process for exit interviews even though they are not mandatory. An employer must simply accept the notice of resignation and pay the money due at the end of the formal notice period, cancelling the employment visa when this is done. As LL is still employed, he can only take time off for interviews with the express permission of his employer. There is no right to take time off work for interviews, even during a notice period.
All employers should present a departing employee with details of their final settlement before their final day of service, which sets out the total payment due as final salary. This should include the last salary payment calculated to the date of departure, any overtime payments owed, payment in lieu for any days of annual leave accrued but not taken, and the end-of-service gratuity, if applicable.
I plan to resign from my company but I have been working with them for just 11 months. My contract with them is unlimited. My question is: will I need to pay the company for the cost of my visa and will I get a ban? JP, Abu Dhabi
Even though JP has been with her employer for less than year, she is not liable for any costs incurred by the employer for arranging her employment visa or ID card. No company should ever ask an employee to pay for such costs; this was covered in Ministerial Order 52 of 1989, Article 6 which makes it clear that all expenses incurred in taking on an employee must be borne by the employer and cannot be passed on. Furthermore, as JP is on an unlimited contract and has been with the company for more than six months, she will not receive a ban on resigning.
Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 25 years’ experience. Contact her at firstname.lastname@example.org. Follow her on Twitter at @FinancialUAE
The advice provided in our columns does not constitute legal advice and is provided for information only
Updated: January 5, 2020 10:38 AM