Dubai: In November 2021, the UAE announced a new amended Labour Law, which will govern the relations between employers and employees in the UAE’s private sector. The law, which covers various aspects of work life in the UAE, came into effect from February 2, 2022.
In a media briefing on December 13, Dr Abdul Rahman Al Awar, Minister of Human Resources and Emiratisation, spoke about how the new law provides many alternatives for end-of-service benefits like saving projects, adding that there will be another media briefing to highlight the other options that would be made available to employees.
Here is what the new law – Federal Law No. 33 of 2021 on the regulation of labour relations – says on the severance pay for full-time workers in the UAE.
ARTICLE (51) - SEVERANCE PAY FOR FULL-TIME WORKERS
1. A national worker shall be entitled to a severance pay at the end of his service pursuant to the legislation regulating pensions and social security in the UAE.
2. A foreign full-time worker who completes one or more years in continuous service is entitled to a severance pay, which is calculated on the basis of the basic wage as follows:
a. 21 working days' wage for each of the first five years of service.
b. 30 working days' wage for each subsequent year of service.
3. A foreign worker shall be entitled to a severance pay for the fractions of the year in proportion to the period of service, provided that he or she has completed one year of continuous service.
4. Days of absence from work without pay shall not be counted within the period of service.
5. Without prejudice to the legislation for pensions or retirement benefits to workers in certain establishments, the severance pay shall be calculated on the basis of the last basic wage received by the foreign worker, for monthly, weekly, daily paid workers and on the basis of the average daily wage for piecemeal paid workers.
6. The severance pay for a foreign worker shall not exceed in aggregate two years' wage.
7. The employee may deduct from the severance pay, any amounts due by law or court order, in accordance with the conditions and procedures set by the Executive Regulations of this Decree-Law.
8. The Cabinet may, upon the proposal of the Minister and after the coordination with concerned entities, adopt other systems instead of the severance pay system. The decision shall determine the conditions, controls and mechanism for participation in such systems.
When should I get my gratuity?
According to Article 53 of the new law, employers are required to pay workers all their pending wages and end-of-service benefits within 14 days from the date that the contract expired.