How to calculate End of Service Gratuity ?

[Lenochka]

Dear experienced Forum Users,
I have a question in relation to End of Service Gratuity.

Situation as follows

MultiNational big Company
employee worked 5 years abroad
then moved here and worked here for 1 year.

Now he resigns/gets fired.

Is the entitlement for the End of Service Gratuity really 6 years ?? Seems to be very very unfair...should be for 1 year as this is the only time worked in the UAE.

Can somebody clarify this.

Many thanks in advance
Lenochka

[Andy Capp]

I guess it depends on what his contract says, he might have got an agreement that his previous 5 years were counted?

Surprising mind you but fair play to the guy if he did.

[Lenochka]

Hi AndyCapp,
cheers fo the feedback.
Although I slightly disagree and would say it is unfair, at least very unfair to the company. Especially given that the end of service gratuity is a component of the UAE Labour Law, hence I do not really see the point why it would be applicable for the years worked abroad.

However, if so, I might recommend to anybody I know within the company abroad who worked for 15+ years to move here to prop up the pension fund, i.e. move here, resign after 1 year and get the "full shebang" :-))

Cheers
L.

[mojoboy7]

Originally Posted by Lenochka

Dear experienced Forum Users,
I have a question in relation to End of Service Gratuity.

Situation as follows

MultiNational big Company
employee worked 5 years abroad
then moved here and worked here for 1 year.

Now he resigns/gets fired.

Is the entitlement for the End of Service Gratuity really 6 years ?? Seems to be very very unfair...should be for 1 year as this is the only time worked in the UAE.

Can somebody clarify this.

Many thanks in advance
Lenochka

Hi, there. I only know about UAE don't know about the other countries. So here it is:
As per Article (132) of the UAE Federal Labour Law, and in respect to the end-of-service gratuity, we quote the following: A worker who has completed a period of one or more years of continuous service shall be entitled to severance pay on termination of his employment. The days of absence from work without pay shall not be included in calculating the period of service. Severance pay shall be calculated as follows:

Twenty-one days' remuneration for each year of the first five years of service. Thirty days' remuneration for each additional year of service provided that the aggregate amount of severance pay does not exceed two years' remuneration.

[Lenochka]

Hi,
many thanks. That's what I can read. However, I am being told that this would aslo apply for years worked abroad for the same company. Hence my query - this does not seem fair to the company given that it is an UAE Law.

Can somebody clarify this ?

Thanks
L.

[cadas]

I don't know if this helps, but when I joined this company in Dubai, I was due to be posted immediately to west africa for 12-24months.

The advice I was given by my own HR department, was to insist on a Dubai based contract, and not to accept a contract stating I was to be based outside Dubai. The reason given was for long term benefits.

In the end I wasn't posted and so moved directly to Dubai

If you work for a multinational then overseas for five years a lot will depend on the wording of the original contract and where (in anywhere) tax was paid.

For our workers posted abroad, they are subject to local employment law of the country they are based in, although all costs associated with that are paid by the parent company in Dubai.

So all in all, I think it will depend on where the original contract was based.

[Sumair]

Yes Cadas is right.
End of service gratuity depends on the labour contract , if executed & validated in UAE then the end of service benefit will accrue according to UAE Labour Law.

The departure/posting from the UAE will be treated as temporary one and will count towards the working days as same as working in UAE.

To keep this relationship intact , the employee can not reside abroad for more than six months in a straight length. By giving this opportunity of in/out to the employee after every six months shows that company also willing to continue this relationship.

It also depends on various conditions like the status of employee in another company permanent / temporary , job position , status etc. Salary paying company/ Taxation effect etc etc..


If employee prove that his status was temporary when reside outside the country , he did not receive any compensation from there , his salary was not taxed there, he remained UAE resident for the full period and salary was drawn from UAE Company he will get the End of service benefit from UAE Company.

If company proves that any one of the given condition is not valid OR the employee keeps the UAE residency at his own without any pre-agreement with Company, employee will not get the Service Benefit for the period reside aboard.

Originally Posted by cadas

I don't know if this helps, but when I joined this company in Dubai, I was due to be posted immediately to west africa for 12-24months.

The advice I was given by my own HR department, was to insist on a Dubai based contract, and not to accept a contract stating I was to be based outside Dubai. The reason given was for long term benefits.

In the end I wasn't posted and so moved directly to Dubai

If you work for a multinational then overseas for five years a lot will depend on the wording of the original contract and where (in anywhere) tax was paid.

For our workers posted abroad, they are subject to local employment law of the country they are based in, although all costs associated with that are paid by the parent company in Dubai.

So all in all, I think it will depend on where the original contract was based.

[Elphaba]

Originally Posted by Lenochka

Hi,
many thanks. That's what I can read. However, I am being told that this would aslo apply for years worked abroad for the same company. Hence my query - this does not seem fair to the company given that it is an UAE Law.

Can somebody clarify this ?

Thanks
L.

Fair? This is the UAE - what has fair got to do with it? And why on earth should it bother you? You sound rather bitter about it.

The company may pay a gratuity on total years of service if a) this is what is stated in the contract, as contract law takes precedence over labour law if terms more favourable, or b) they choose to do so.
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[Lenochka]

Originally Posted by Elphaba

Fair? This is the UAE - what has fair got to do with it? And why on earth should it bother you? You sound rather bitter about it.

The company may pay a gratuity on total years of service if a) this is what is stated in the contract, as contract law takes precedence over labour law if terms more favourable, or b) they choose to do so.
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Sorry Elphaba,
I am not bitter, I just try to find out what the law is. And why it would be the case if somebody works for a company x-years abroad then then moves here. Works for 1 year and resigns....and would then be entitled for X+1 years gratuity (calculated under the UAE law which only applied for 1 year of the whole working period). Surely you can agree that this does sounds a bit awkward.
So if one works for 20 odd years elsewhere.....move here for 1 year, resign and collect 21 years of End of gratuity service under UAE law....

As far as I can see it should be 20 years of beneftis from whereever the transfer from took place and 1 year of UAE gratuity. And at that point I am not taken into consideration that the company may choose to do so.....as this has nothing to do with the law.

or am I missing something ?

[Elphaba]

I would say it is a private matter between the individual and their employer.

No law has been broken and for a change someone is receiving more than the basic entitlement.

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