Dubai: If your labour contract mentions that you will receive a basic pay along with your housing allowance when you go on annual leave, how is the pay for unused leaves calculated for gratuity, once you resign or are terminated? Does the calculation include the basic pay, or are you entitled to the housing allowance for the period as well? This was the query raised by a Gulf News reader.
He wrote: “I worked with a private organisation in Dubai and they terminated my services. I served the 30-day notice period and my leave balance was 58 days. My employer paid only the basic salary for all these days, even though my contract states that when I am on leave, I will be paid the basic salary and the housing allowance. This housing allowance was not included in the leave salary calculation for gratuity. Is that correct? I would appreciate your clarification on this, as per the UAE Labour Law.”
Gulf News raised the query with Suneer Kumar, Senior Associate at Al Suwaidi and company, who said that Articles 78 and 79 of the UAE Labour Law as well as several court judgements clarify that an employee will be paid for any unused leaves based on the basic salary he or she was withdrawing at the time they were entitled to the leave.
“This is specified in Article 79 of the Federal Law No. 8 of 1980 or UAE Labour Law,” Kumar said.
According to Article 79, when a worker is dismissed or if he or she resigns from a job, they will be entitled to payment against accrued annual leave days. The article states: “Such payment shall be calculated on the basis of the wages paid to the worker at the time of such leave.”
“While the law mentions the term ‘on the basis of wages’, several Cassation Court judgements clarify the legal position that accrued leave salary shall be paid for, upon the termination and resignation, on the basis of the basic salary when the leave becomes due,” Kumar added.
Kumar specifically mentioned the Cassation Court judgement of 13/2018, which referred to articles 78 and 79 of the Labour Law, which stated: “It is decided that the leave allowance that the worker did not receive is calculated on the basis of the basic wage that he was receiving at the time of his entitlement to the leave.”
So, if you have accrued leaves at the time of leaving a job, you will be paid according to the basic salary you were receiving at the time that you were entitled to the leaves, based on the Labour Law and the court judgements that have been issued on these cases.