Ask the Law
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A sales employee asks:

Question: I work in the sales department of a company and I have been paid on a commission basis for the last three years. How will my end-of-service gratuity be calculated? Last month, my company terminated me. My company claims that as per UAE Labour Law, I am not entitled to claim end-of-service benefits because I am working on a commission basis. It has paid me overtime and housing allowance.

Answer: UAE Labour Law states that for the purpose of calculating end-of-service benefits, whatever is given to the employee in kind - such as transport, housing, overtime, children’s education and other allowances – is not considered.

Only the basic salary is used to calculate gratuity.

However, in the past few years, there have been a number of cases where the UAE courts have awarded gratuity based on basic salary and certain commissions. Additionally, a bonus could potentially be included if it operates in the same way as certain commissions and the employee has a track record of achieving targets.

When there is a change in contract, the salary before any change has no bearing.

If you have enough supporting documents to prove that the commission you have been taking for the past three years was considered as salary, you have a case and can make a claim in the labour court.

Termination during probation

Question: I have been working with a free zone company in Dubai for five months and three weeks and am on the company visa. One month ago, my employer terminated my service without notice. I was supposed to finish my probation period in a week’s time. My employer gave me no reason for the termination. As per the UAE Labour Law, do I have the right to file a labour case and ask for compensation for unfair termination? Will the law consider the fact that I had only one week to complete my probation? Can I claim dues for one month notice?

Answer: UAE Labour Law, Article 37 states that: “A worker may be engaged on probation for a period not exceeding six months, during which time his services may be terminated by the employer without notice or severance pay; provided that a worker shall not be engaged on probation more than once in the service of any one employer. Where a worker successfully completes his period of probation and remains in his job, the said period shall be reckoned towards his period of service.”

Therefore, the employer has the right to terminate the employee without reason or notice and the employee has no right to claim compensation or one month salary for the notice period.

Your end-of-service gratuity can be calculated according to that commission as average of the last six months during the work period or within a reasonable period.

Ask the Law questions are answered by lawyer Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.