Ask the Law: Is calculation of end-of-service benefits in UAE different in case of resignation and dismissal of worker?
Serving notice period is mandatory, or else employee must compensate employer
End-of-service benefits
Question: I have been working in a private company for three years with an employment contract certified by the Ministry of Labour for an unlimited period. My question is, will end-of-service benefits be calculated in a different way if I resign from my job, than if the employer had dismissed me from service? Also, if I resign, is the employer obligated to make me work through the notice period or will I be paid the salary for that month even if I don’t work?
Answer: Firstly, there is no difference in calculating end-of-service benefits — irrespective of whether the employee resigns or the employer dismisses him or her from service. According to Article 51 of the new Labour Law, the employer may only deduct from the worker’s end-of-service benefits any amount that is due legally or by judicial ruling, pursuant to the following conditions and procedures:
A. The amount owed by the worker to recover loans or overpayment.
B. To recover an amount that was supposed to have been paid by the worker as a contribution to his or her end-of-service benefit, pension or insurance, in accordance with the legislation in force in the State.
C. As amount deducted from the worker over violations committed by him or her, according to the regulation of penalties applicable at the establishment and approved by the Labour Ministry.
D. As debts owed in implementation of a court ruling issued against the worker.
E. As amount for repairing damage caused by the worker, due to his or her fault or due to his or her violation of the employer’s instructions that led to the damage, destruction or loss of tools, machines, products or material owned by the employer.
Secondly, you have to serve your notice period. Or else, you will be obliged to pay to the other party a compensation, which is called Notice Period Allowance, unless the employer requested you not to work and in that case the employer has to pay you. Article 43 of the new Labour Law states: ‘Either party to the employment contract may terminate the contract for any legitimate reason, provided that the other party is notified in writing and work shall be performed during the notice period [as] agreed upon in the contract, provided that such period is not less than 30 days and not more than 90 days.
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‘The employment contract continues to be valid throughout the notice period referred to in this Article and is terminated upon expiry of such period. The worker shall be entitled to his or her full wage during the notice period, according to the last wage he or she had drawn. It may be agreed upon that exemption from the notice period condition or reducing its period while preserving all the rights of the worker for the notice period agreed upon in the employment contract, provided that the notice period is the same for both the parties, unless it serves the interests of the worker. The party that does not abide by the notice period shall pay to the other party a compensation, which is called Notice Period Allowance — even if the absence of notification does not cause damage to the other party and the compensation shall be equal to the worker’s wage for the full notice period or the remaining part thereof.’