I am a general manager in a company in Dubai. I want to know my position under the UAE labour law in terms of imposing disciplinary penalties on my employees.
According to Article 102 of Federal Labour Law No 8 of 1980, an employer has the right to impose disciplinary penalties in the following order:
A warning should be issued for the first offence followed by a fine if the offence is repeated.
Suspension from work with reduced pay for a period not exceeding 10 days;
Forfeiture or deferment of a periodic increment, in establishment having an increment scheme;
Forfeiture or promotion, in establishment having a promotion scheme.
Dismissal without prejudice to severance pay;
Dismissal with forfeiture of all part of the severance pay. This penalty may only be imposed on the grounds expressly specified in Article 120 of this law.
How is gratuity calculated?
I would like to know how end-of-service gratuity is calculated. Is it calculated on the basis of basic salary plus bonus and overtime hours? Is the basic salary considered to be the one mentioned in the employment contract, or is it the current salary? I joined my company in 2006 and have completed nearly 11 years in service. A contract I signed with my company mentions that at the time of termination of my service my company will pay gratuity for a maximum of three years of service. However, this clause is not mentioned in my formal labour contract. A month ago, my company terminated my services. My notice period is going to expire next month. My employer is calculating my gratuity for for three years only. Do I have the right to demand that 11 years of service be considered?
Article 134 of the Federal Labour Law No 8 of 1980 states: “Without prejudice to the provisions of laws that grant pension, or retirement benefits, to employees in certain companies, severance pay shall be calculated on the basis of wages last due for workers, who are paid on a monthly, weekly and daily basis. For those paid piecemeal, it is calculated on the basis of the average daily wage referred to in Article 57. The wage used as a basis for calculating severance pay shall not include whatever is given to the worker in kind, housing allowance, transport allowance, travel allowance, overtime pay, representation allowance, cashier’s allowances, children’s education UAE Labour Law 29 allowance, allowances for recreational and social facilities, and any other bonuses or allowances.”
As per the above-mentioned article, the current basic salary will be considered.
Finally, as per the Dubai Supreme Court, the agreement signed by the employee and company waiving end-of-service rights is illegal. Therefore, the questioner has the right to ask the company to calculate his gratuity for 11 years.
Questions answered by advocate Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.