Dubai Forums Dubai Expat Forums Working in Dubai

Hi all,

Thought I would sign up to the forum, I am hoping to get some answers in regards to employment law in the UAE. Would rather put my questions out for public perusal before deciding on which course of action to take.

I am currently working for a US Company, not working in the UAE, but the company is Registered to Dubai Internet City, therefore we fall under UAE employment law.

Myself and 60 colleagues, have been told that our services are no longer required and that with effect December we will be released from our limited contracts (13 month contracts with renewal options). So we fall under the Termination without Cause distinction in our contracts. Ill post below what the clause is, so all you budding or actual lawyers can have a quick look and see if it is worth persuing severance gratuities:

C. Termination Without Cause
Employer has the right, in its sole discretion, to terminate this Contract without cause at any time. In the event of such termination, the Employee shall be entitled to a pro-rated completion bonus, payment of accrued annual leave pay and return transportation. Employer shall be responsible for return transportation costs as provided in Paragraph 17.D.

Now it looks fairly cut and dry, but after a little research have discovered that any amibiguities in contracts, then the Labour Department will generally rule in favor of the employee. Now to me, the paragraph doesnt say anything about severance pay, wether in my positive or negative and therefore is ambigiuos.

The reason we are looking into this matter is that any gratuity payment will be significant (50,000 USD +) as we are on a resonably high salary. I know most of you will be complaining, take it to a lawyer, but wondering if anyone has been in this situation. All up any benefits will be in the proximity of 70,000 USD, so it is important for us to do our research.

I have been working for the company for almost 3 years and most have been here 5 years+.

Hopefully someone can offer some advice...

Cheers

If you go to the Working in Dubai forum, you will find past threads where you will find responses by our forum member, Bonk, who is pretty knowledgeable about these things. He has been able to answer many questions regarding employment and severance/gratuity payments.

Actually, you really don't need a lawyer to find out what your rights are. If you did not work for a company registered with DIFC (employment laws are pretty similar to federal), all you need to do is to go to the Ministry of Labour, bring your contract and your notice that you are being made redundant and they can tell you what you would be entitled to with regard to end-of-service gratuity - which is madatory under UAE law. My understanding is that they are very helpful.

I don't know what the term "pro-rated completion bonus is", but you would be entitled to 21 days for each year you completed work up to 5 years, after which it would be 30 days for each year. As for year 3, it will be pro-rated using the 21 days payout. If MOL tells you that you are entitled to the end-of-service gratuity, then the pro-rated completion bonus, I would think, would be separate and apart from the gratuity. If you go to the MOL, discuss this as your employer may say that was with regard to your gratuity, which in my opinion, it is not as it is stated as being a "bonus".

Before going to the MOL, I would also suggest that you send your HR person an email and ask (getting it in writing!) how that bonus is going to be calculated. As you know, a bonus is always at the discretion of the employer. If MOL tells you that they have to give you the full gratuity, and you don't have anything in writing with your employer regarding the bonus formula, your employer may try to change the bonus formula to set off what they will have to pay out over and above what they were planning.

This was posted 17 November 2010

http://www.dubaifaqs.com/gratuity-calculation-dubai.php

Hopefully Bonk will see this (although I haven't seen him on the forum for some time) and you can get his input. Like I said earlier, do a search.

Good luck to you and your colleagues.

Ok guys I've done a little research by myself in regards to this and have come up with some more info...

We fall under TECOM employment regulations seeing as the company is registered in Dubai Internet City and it is not registered with DIFC (lucky for me I think...lol). The provision under TECOM Reg's, states in part:

14.7 Working conditions for employees, including but not limited to, hours of work, holiday leave and entitlement, end of service benefits and termination of contract shall as a minimum be as set out in the UAE Labour Law.

As you will see in my earlier post that there is nothing said about severance pay, so my deduction from the above TECOM provision is that the bare minimum should be as set by UAE Labour Law. Further, we are on limited contracts, being terminated without cause and with only 4 or 5 days official (ie in writing notice...which in itself is if not illegal - giving only 4 days official notice, but defintely immoral and unethical). The UAE law governing limited contract termination without cause states in part:

If the employer terminates the contract for reasons other than those specified in Article 120 of the Law, he will be liable to pay compensation to the employee. This compensation is determined on the basis of the wages due for a period of three months or for the remaining period of the contract, whichever is less, unless an article in the contract states otherwise.

Now Bora Bora asked a question in regards to a bonus being paid and here is the clause from the para in my contract about the bonus:

Upon successful completion of this Contract, the Employee will be entitled to receive a Completion Bonus equal to 10% of the base wages earned under this paragraph. In the event Employee is terminated pursuant to Paragraph 17.A., Termination for Cause or 17.B., Voluntary Termination by Employee, Employee shall forfeit all rights or entitlement to the Completion Bonus.

Now we are not being terminated under 17.A or 17.B, as those refer to Termination with cause and voluntary termination from Employee, so the only one we fall under is the Termination without Cause and by proxy the UAE law stated above applies.

Ok ok... I think I have gone on long enough now and from appearances I have answered most of my own questions, but still I have some doubts and would love to hear if anyone has had dealings similar to my own and would love to hear from anyone who has filed through TECOM concerning a labour dispute..

Cheers

I still say the completion bonus does not fall under UAE law and is separate and apart from your end of service gratuity. Employer cannot give you the option of one or the other. IMO, they are obligated to pay both.

I still say it is worth a trip to the Ministry of Labour. All it is going to cost you is time.

Bascially, what you have to understand is that contracts here are basically not worth the paper they're written on. You might well have high overall salaries, but gratuity is paid on your 'basic' salary, which is usually a tiny amount, with the rest of your salary being made up of allowances.

If you're in TECOM, is the company then not in a freezone? In which case UAE Labour Law does not apply. Sadly trying to get what you might actually be entitled to, could be a long horrific process, people take years to get what they're actually owed out of companies.

Seeing as you're on a limited contract, I'd say you're lucky to be get given anything at all on termination.

Hi again Bora Bora and Hi to Chocoholic as well.

Bora Bora, thats what I am thinking as well, we are entitiled to the completion bonus (they pay this after completing each year long contract - sort of incentive to stick around and fulfil our end of the deal) and the severance pay would stand alone, so yes in theory the company would be liable for both payments.

Chocoholic, yep I read up on the basic salary statement, we have two types of employees, basically American and non-american. The US Nationals, as you state have a rather small 'basic' salary, which is padded with all sorts of allowances. The non-US Nationals have no allowances and our basic salary monthly is higher than the americans, but we both receive the same salary - its a way for them to dodge all sorts of taxes in the states etc etc...

I also included the statement from the TECOM Employment Regulations (I'll paste here again):

14.7 Working conditions for employees, including but not limited to, hours of work, holiday leave and entitlement, end of service benefits and termination of contract shall as a minimum be as set out in the UAE Labour Law.

As you can see even though this 'freezone' does have some of its own laws etc, they refer back to UAE Labor Laws as a bare minimum, which in my opinion the company has not met and is therefore liable to pay the 3 months severance pay as we are on a limited contract.

Anymore thoughts from anyone...?

Chocoholic wrote:Bascially, what you have to understand is that contracts here are basically not worth the paper they're written on. You might well have high overall salaries, but gratuity is paid on your 'basic' salary, which is usually a tiny amount, with the rest of your salary being made up of allowances.

If you're in TECOM, is the company then not in a freezone? In which case UAE Labour Law does not apply. Sadly trying to get what you might actually be entitled to, could be a long horrific process, people take years to get what they're actually owed out of companies.

Seeing as you're on a limited contract, I'd say you're lucky to be get given anything at all on termination.

Took a look at TECOM employment regulations. All disputes will be settled by the MOL who would, if deemed appropriate, refer cases to the Dubai Courts.

The UAE (Federal) Labor Law applies across the board to all companies operating within the UAE, which includes end of service gratuity. The Labor Law provides the minimum that an employer has to provide. Anything over and above is at the discretion of the employer, such as including discretionary bonuses in the contract (OPs contract does not state discretionary, but a condition to employment and commitment by the employer. The clause in the contract is over and above end of service gratuity, and should be honored. There is no debate on the end of service gratuity - it has to be paid out. But as you point out Chocs, going to court is a long and tedious process. Even if one should win a case, there is no guarantee that the (former) employer will pay the dues, so round and round you go.

The only exception to payout would be if an employee was terminated for gross misconduct, which the employer had better have proof of should the ex-employee take it to MOL and then probably Dubai Court.

The only other suggestion is: if all else fails, contact HR in the head office in the US.