Dubai: Dubai: If an employee's work contract is terminated by the employer or if an employee resigns from their job, they are normally entitled to end-of-service benefits, as per the UAE Labour Law. However, there are cases when an employer may deduct an amount from your severance package, according to a new Cabinet Resolution issued by the Ministry of Human Resources and Emiratisation (MOHRE).
Article 51 of the new UAE Labour Law - Federal Decree Law No. 33 of 2021 - stipulates the severance pay that a full-time employee is entitled to and how it will be calculated. Clause 7 of this Article states that an employer may deduct from the severance pay in accordance "any amounts due by law or court order, in accordance with the conditions and procedures set by the Executive Regulations of this Decree Law".
The situations in which an employer can deduct an employee's severance pay are outlined in Cabinet Resolution No. (1) of 2022 issued by MOHRE. Article 29 of the resolution goes on to state that an employer may deduct from an employee's end-of-service benefit any amount that is legally due to the employer either because of a loan that was extended to the employee, or in the case of overpayment. Also, in cases where an employee commits violations according to the regulation of penalties that are applicable at the company and approved by MOHRE, or to repair damages caused by the worker due to negligence.
The Article also establishes a time frame within which the employer is required to have deducted the amount from the severance pay, from the time the violation is committed by the worker.
Here is a detailed look at what the decree states:
Article 29 of Cabinet Resolution No. (1) of 2022 - Rules for Deductions from End of Service Benefits of Workers
Subject to the provisions of Clause (7) of Article (51) of the Decree-Law:
1. The employer may deduct from the worker’s end-of-service benefit any amounts that are due legally or by judicial ruling, pursuant to the following conditions and procedures:
a. The amounts owed by the worker to recover loans or overpayment.
b. To recover the amounts that were supposed to be paid by the workers as a contribution to the end of service, retirement pensions or insurance, in accordance with the legislation in force in the State.
c. As amounts deducted from the worker for violations he commits according to the regulation of penalties applicable at the establishment and approved by the Ministry.
d. As debts owed in implementation of a court ruling issued against the worker.
e. As amounts for repairing damage caused by the worker, due to his fault or to his violation of the employer’s instructions and that led to the damage, destruction or loss of tools, machines, products or materials owned by the employer.
2. The employer shall have followed the procedures set out in the Decree-Law and in this Resolution when the deducted amounts involve violations committed by the worker or are a result of damage caused by his fault, and not more than three months shall have lapsed from the due date of such amounts unless otherwise agreed.