Dubai: Whether you made the decision to resign or were fired from your job, both are stressful situations that create uncertainty and worry.
To navigate the post-termination period, the UAE’s Labour Law and the Ministry of Human Resources and Emiratisation (MOHRE) have set clear regulations on employee rights and introduced schemes that provide stronger financial security for workers in the UAE.
Here is a breakdown of the monetary benefits and compensation you are legally entitled to.
1. New savings scheme - ‘Voluntary Alternative End-of-Service Benefits’
In the UAE, private sector workers can now walk away with a higher end-of-service gratuity after their work contract is terminated if they are enrolled in the new alternative end of service benefits system.
The savings scheme, as suggested by the name, is an alternative to the gratuity system that workers are entitled to as per the UAE Labour Law. However, this is a voluntary scheme. It invests the end-of-service gratuity benefits of employees who have been registered by their employers in approved funds, enabling them to receive returns upon completion of their service.
The scheme was introduced in November 2023.
Who signs up for the scheme?
Companies have to subscribe to the scheme through MOHRE and then select the employees they want registered for the scheme. If your employers do register you, they will need to make monthly contributions to the chosen investment fund.
What happens to the worker's previous gratuity?
As per MOHRE, companies must discontinue the use of the current end-of-service benefits system from the time they are registered in the new scheme. However, the employees’ entitlements up until that time, as per the gratuity calculations in the UAE Labour Law, will be preserved.
When does the employee receive investment returns from the savings scheme?
If you are enrolled in the scheme, and lose your job or are fired, you should receive the investment returns from this scheme within 14 days from the termination of employment, as per Cabinet Resolution No. 96 of 2023.
For a more detailed guide on the benefits of the scheme for workers, and the subscription fee that companies would need to pay for each employee, read our guide here.
2. Gratuity for full-time private sector workers in UAE
While the alternative end-of-service benefit scheme mentioned above is new, and only for certain workers, all workers in the UAE’s private sector are entitled to receive an end-of-service gratuity, also known as severance pay, based on their years of service in the UAE.
As per Article 51 of the UAE’s Labour Law, you are entitled to a gratuity payout if you have completed one year of service.
How do I calculate gratuity?
You first need to know your basic salary after which you can calculate your gratuity based on the number of years of service in the company:
• If a worker has served for less than one year, he or she is not entitled to any gratuity pay.
• If a worker has served for more than one year but less than five years, he or she is entitled to a gratuity payment based on 21 days’ basic salary for each year of work.
• If a worker has served more than five years, he or she is entitled to a gratuity payment of 30 days' basic salary for each year of work following the first five years.
In all cases, the total gratuity shall not exceed the wage of two years.
Once you have figured out your basic salary and the period of your employment, you can go ahead and start calculating your gratuity. To find out your end-of-service benefits, you can use the Gulf News online gratuity calculator here.
It is important to note that days of absence from work without pay are not included in the calculation of the period of service.
When should I receive my gratuity?
As per Article 51, the employer should pay the worker within 14 days from the date of the contract termination, his or her remuneration and all other entitlements. If your gratuity is delayed, you are within your rights to file a labour complaint.
The calculations above are for expatriate workers in the private sector. According to u.ae, the UAE’s official online information platform, end-of-service benefits for Emiratis working in the private sector will be calculated in accordance with the legislation regulating the pensions and social securities in the UAE.
3. Unemployment Insurance Scheme
The Involuntary Loss of Employment (ILOE) scheme is a form of insurance or social security for workers in the federal and private sectors. The scheme aims to protect terminated employees by offering them a maximum three-month cash compensation as long as they did not resign from their job or were dismissed for disciplinary reasons.
To be eligible for the compensation, employees have to be subscribed to the scheme for at least 12 consecutive months.
The ILOE scheme is mandatory and the premium for the insurance policy has to be paid for by the employee. You have the option to enroll through different subscription methods – monthly, quarterly, semi-annual or annual.
When do workers receive the ILOE cash compensation?
If you meet all the conditions for claiming compensation and have not resigned or been terminated for disciplinary reasons, you must submit a claim within 30 days following the termination of the employment relationship.
Once you have submitted the claim, service providers that are licensed by the UAE’s Central Bank to provide the insurance policy, are required to make the payment within two weeks of receiving the claim.
4. Repatriation ticket
If your work contract has ended, and you plan to move back to your home country, your employer is legally responsible for paying for your flight ticket.
As per Article 13 of the UAE’s Labour Law, a repatriation ticket is only granted if you have been terminated from the job. You will not be eligible for a paid ticket back home if you have resigned, joined another company, continue to stay in the UAE or are terminated for misconduct.
