The labor law establishes the end of service benefit UAE for any worker, both national and foreign. This is a payment that workers whose services exceed one year will receive, with limited or unlimited contracts.
In this article, you will be able to know what this benefit is about and how to make the corresponding calculation. Let us see:
Private sector nationals under the pension and social insurance legislation will receive the end of service benefit UAE. However, article 51 of the labor law establishes the benefits that foreign workers in the private sector will receive. These benefits are the following:
-Employees with at least 1 year of service must receive an end of service gratuity for the fraction served.
-The employer must do the calculation of the gratuity based on the basic salary of the worker. Therefore, this payment does not include extra benefits such as transportation, housing, public services, etc.
-If the employee has a debt with the employer, the latter may reduce it from the end-of-service payment.
-The employer must pay the benefit before the end of 14 days from the contract termination date.
The calculation of the end of service benefits UAE was made based on the limited and unlimited contracts. However, the changes in the legislation establish limited employment contracts with a duration of up to 3 years. The employer must do the calculation of these benefits as follows:
-If the employee has worked for the company for less than one year, they are not entitled to the benefit.
-For workers with between 1 and 5 years of service, they must receive 21 days of salary for each year.
-If the employee has worked for more than 5 years, he must receive 30 days of salary for each year that exceeds 5.
Article 30 of Cabinet Resolution number 1 of 2022 establishes the end-of-service benefits in UAE for workers with other types of contracts. This is under the implementation of the regulations of federal law decree number 33 of 2021. Thus, workers with part-time contracts or other types of contracts will also receive the benefit.
You must take the number of hours worked on the annual contract. Then, you must divide it by the number of hours worked on the full-time contract per year. Now, you must multiply it by 100 and you will obtain the percentage to calculate the benefit for termination of service.
You will then need to take this percentage and multiply it by the value of the benefit owed for the full-time contract.
On the other hand, article 30 in its second section establishes that the worker cannot receive the benefit if the temporary work lasted less than one year. As in the cases of benefits for full-time employees, the calculation must be based on the last salary received by the employee.
Since we are specialists in providing assistance with legal issues, we can offer you the necessary help concerning this benefit. You can contact us at telephone number +971 433 16 688, to make any questions or ask us your concerns. Also, you can send us an email on [email protected] and we will contact you as soon as possible.