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28 March 2024

Gratuity calculation on day you stop work, not before: Dubai Court

Staff was also asked to pay for furniture (File)

Published
By Mohammed El Sadafy

An employee must be considered to be on the rolls of the employer until his last working day for the purpose of calculating end-of-service benefits like gratuity, the Dubai Court of Cassation has ruled.

The court also ruled that the employee’s service does not end on the day he submits his resignation but includes the notice period.

The court gave this verdict in the case of an employee who had sued his employer, seeking Dh527,000 in end-of-service benefits.

The employee had joined the company in Saudi Arabia on a salary of Dh25,000, which was raised to 15,000 Deustchemarks or Dh35,000 after he was transferred to a branch in Dubai.

In his plea to the court, the employee said the company had sacked him after three years without any warning.

The company filed a counter suit demanding Dh95,000 from the employee, including Dh80,000 as house rent for eight months from the date of his resignation to the end of the lease contract.

The company also demanded Dh15,000 as compensation for use of furniture or payment of its value of Dh50,000.

The Court Of First Instance ordered the company to pay DM26,000 or its equivalent in dirhams to the employee. It also required the employee to return the furniture in its current state to the company.

Both parties to the dispute then approached the Court of Appeals, which ordered the company to pay the employee DM40,000 or its equivalent in dirhams.

The employer then approached the Court of Cassation which upheld the verdict of the Court of Appeal, ordering payment of DM40,000 or its equivalent in dirhams to the ex-staffer.

The Court of Cassation said though the employment contract ends with the employee’s resignation, if he continues working until his resignation is accepted or until he stops reporting to work, that extended period must be taken into considering for calculating end-of-service benefits like gratuity.

The court also said non-payment of his end-of-service benefits like gratuity entitles the employee to continue to occupy company accommodation, as per Article 131 of the Labour Law. It also said it is inappropriate for the employer to charge the employee for using furniture in house provided by the employer.