KHALEEJ TIMES, Monday, Dec 20, 2021 | Jumada Al-Uola 15, 1443
New UAE labour law 2022: How is gratuity calculated?
Emirates:
Question: Can you please explain to me how gratuity is calculated? I have just
been given a raise, but I have observed that my basic salary has been kept the
same. Will this affect my gratuity?
Answer: It is assumed that your employment is subject to the provisions
of the UAE's Federal Law No 8 of 1980 on the Regulation of Employment Relations
as amended from time to time (the Employment Law), along with the Ministerial
Resolutions and Decrees issued in pursuance thereof.
Following your query, Article 134 of the Employment Law may be referred. The
end-of-service gratuity of an employee is to be calculated based on his/her last
drawn salary subject to the condition that it shall not include anything given
to the employee in kind, in addition to allowances for housing, transport,
travel, overtime, representation, children's education, recreation and social
services. The said Article 134 reads as follows:
"Article (134)
(1) Without prejudice to the provisions of some laws regarding the granting
of pensions and gratuities to employees of some establishments, the end of
service gratuity shall be computed on the basis of last wage which the
employee was entitled to, in respect of those drawing their salary per
month, week or day, and on the basis of average daily wage stipulated in
Article (57) in respect of those drawing their wages on piece work basis.
(2) The wage which is considered as basis for computation of the end of
service gratuity shall not include anything given to the employee in kind,
housing allowance, transport allowance, travel allowance, overtime
allowance, representation allowance, cashier's allowance, children education
allowance, recreation and social services allowance or any other
allowances."
Come February 2022, the Employment Law shall be abrogated and replaced entirely
by the new Federal Decree-Law No (47) of 2021 On the Standard General Rules of
Work in the United Arab Emirates (the New Employment Law).
By Article 11 clause 2 of the New Employment Law, end of service benefits of a
foreign/expatriate employee is to be calculated based on the basic wage. The
provisions (as translated) read as follows:
"Article (11)
End-of-Service Benefit
2. A foreign Employee or Worker who completes (1) one continuous year of
full-time service shall be entitled to an end of service benefit at the end of
his service, which is calculated on the basis of the Basic Wage as follows:
a. 21 days for each year of the first 5 years of service.
b. 30 days for any subsequent year of service."
The New Employment Law shall apply to your employment, if you continue your
employment with your current employer, till enforcement of the New Employment
Law."