End-of-service benefits
Question: I have been working in a private company for 14 years now. A month ago, I resigned from my job. The notice period, according to the work contract, is three months. However, the employer told me not to work during the notice period. Am I legally entitled, according to the new UAE Labour Law, to ask my employer to pay me three months’ salary for the notice period? Is there a ceiling on the maximum amount of end-of-service benefits? Will my end-of-service benefits be affected by my resignation? Please advise.
Answer: Firstly, you are entitled to three months’ notice period because, according to UAE Labour Law, the party that does not abide by the notice period shall pay the other party a compensation called Notice Period Allowance. Moreover, your end-of-service benefits will not be affected by your resignation because either party to the employment contract may terminate the contract for any legitimate reason after notifying the other party about the termination in writing.
Article 43 of UAE Labour Law mentions:
1. Either party to the employment contract may terminate the contract for any legitimate reason, provided that the other party is notified in writing and work shall be performed during the notice period as agreed upon in the contract, provided that such period is not less than 30 days and not more than 90 days.
2. The employment contract continues to be valid throughout the notice period referred to in this Article and is terminated upon expiry of such period. The worker shall be entitled to his or her full wage for that period, according to the last wage drawn by him or her and he or she shall work during that period if the employer requests the same.
It may be agreed upon that exemption from the notice period condition or reducing the period while preserving all the rights of the worker for the notice period as agreed upon in the employment contract, provided that the notice period is the same for both parties, unless it serves the interests of the worker.
3. The party that does not abide by the notice period shall pay to the other party a compensation, which is called Notice Period Allowance, even if the absence of notification does not cause damage to the other party and the compensation shall be equal to the worker’s wage for the full notice period or the remaining part thereof.
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Secondly, the maximum amount of end-of-service benefits shall not exceed two years’ wage, according to Article 51 of the same law, which states: ‘End-of-service benefits shall be calculated according to the last basic wage the worker was entitled to, with respect to those who receive their wages on a monthly, weekly or daily basis and according to the average daily wage stipulated in the provisions hereof for those who receive their wages on a piecemeal basis. It is required, based on the foregoing, that end-of-service benefits for an expatriate worker in its entirety must not exceed two years’ wages.’
