UAE end of service gratuity includes notice period for laid-off worker

I am an employer but am a bit confused on the calculation of the end of service gratuity payment. The employee is being made redundant and has a one-month grace period. The employee’s last day in the office will be January 31 and the grace period will end on February 28. Will the gratuity calculation […]

I am an employer but am a bit confused on the calculation of the end of service gratuity payment. The employee is being made redundant and has a one-month grace period. The employee’s last day in the office will be January 31 and the grace period will end on February 28. Will the gratuity calculation period finish at the end of January or the end of February? Do we only use the basic salary? In addition to departing to their home country, is the employee also entitled to a one-way home leave ticket? ML, Abu Dhabi

If an employee is made redundant they are entitled to a 30-day notice period and they must be paid in full for this time, whether or not they are required to work. The last day of the notice period is considered to be the final day of service, so in this case the gratuity should be calculated up to March 1, which is a full 30 days from January 31. The visa must remain valid until that date. The employer is responsible for cost of a flight to a home country only if the employee is leaving the UAE and not taking on a new job. This is clarified in Article 131 of UAE Labour Law: “Expenses for repatriation of an employee to his place of origin or any other place agreed upon by both parties shall be borne by the employer. If the employee after the end of his contract takes up employment somewhere else, repatriation expenses upon termination of his service shall be paid by the last employer.”

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with more than 20 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only

Source: Business

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