The Federal Decree-Law no. 33, also called the New Labour Law focuses on the employment relationship between the employee and the employer and the obligations of both parties. The new labor law explicitly explains and regulates different aspects of employment. This legislation aims to increase the efficiency of the labor market of the UAE in order to attract global talent to the UAE. The purpose is to create a healthy, safe, and profitable working environment that is recognized worldwide making the UAE one of the largest business hubs in the world. One of the most significant aspects of employment is the end of service benefits and the new labor explains vividly its regulations.
End Of Service Benefits for Full-Time Workers
End-of-service benefits in UAE calculation are a lot easier with the help of the information provided by the new labor law. Following is all the federal law explains about the end-of-service benefits for full-time employees;
- According to the new labor law, both the national and foreign employees shall receive an end-of-service gratuity upon the termination of the employment contract.
- The end-of-service gratuity that would be entitled to the national employee working full time shall be in accordance with the same legislation that regulates the social security and pensions system in the UAE.
- When it comes to foreign employees working full time, they shall only receive the end-of-service gratuity if they complete at least a year of regular service.
- The end of service gratuity of a foreign employee shall be calculated in such a way that it includes the wage of 21 days for each year up to five years of service.
- If a foreign employee worked for more than five years, the end of service gratuity shall be calculated in such a way that it includes the wage of 30 days for each additional year other than the first five years.
- The absent days which are usually unpaid shall not be included while calculating the end of service benefits for employees.
- While respecting the legislation that regulates the retirement and pension benefits for employees, the calculation of the end of service gratuity shall be in accordance with the last amount of wage given to the employee. This should be done with respect to those who get paid on a daily, weekly, and monthly basis and also to those who get paid on a piecework or project basis.
- For the end of service gratuity given to the foreign employee, there is another condition that the total amount of end of service gratuity should not exceed the amount of 2 years’ wage.
- According to the regulation, the employer is allowed to perform any deduction from the end of service gratuity of the employee if payable on part of the employee under a judgment or law.
- Employers may also introduce alternatives other than the end of service gratuity but they have to consult the Ministry or relevant authorities to get approval.
How Does The New Labour Law Define A Worker?
A worker or an employee in the UAE is an individual who is authorized by the Ministry to get employed in any of the UAE’s authorized and registered companies and is governed by the employer of that company. An employee in the UAE that is under 18 years of age but has reached 15 years of age is called a Juvenile.
Is The New Labour Law For Government Sector?
The Ministry can give the right to the Cabinet to include or exclude any category from the provisions of the new labor law. Basically, the provisions in the new labor law apply to the workers or employees and employers or establishments in the private sector of the UAE. Workers of local government authorities and federal authorities do not fall under the scope of the new labor law. Also, the workers of security forces i.e, police and army are also not subject to this law. Lastly, domestic employees also do not fall under the scope of these provisions.
Choose the Best Service
If this information was helpful to you, consult HR outsourcing companies in Dubai for utmost guidance. If you want to get a job in the UAE, it is vital for you to learn the labor laws and employment regulation systems in the UAE in order to understand how you will get benefitted while working in the UAE. Learn more about the end-of-service rules and end-of-service UAE free zone on our website. You might want complete guidance on how companies in the UAE are supposed to respect your rights as an employee. To learn about this and much more, visit our website or ask our experts to get all of your queries answered.
With a vast experience of 10 years, Jean Rodas is a specialist in managing all aspects of Payroll and HR. Within Payroll, she has comprehensive knowledge in areas such as computation of final settlement, payslips, WPS registration, salary transfers, leave trackers, and end of service benefits among others, which she has successfully carried out for clients from diverse industries.