The amount of money that is given to an employee on termination can vary depending on several factors, say UAE-based legal experts. Knowing the law, therefore, is vital.
When in doubt, employees should refer to their contracts, which should specify the amount that will be due to them on termination.
“It [compensation that one is supposed to receive upon termination] varies depending on the circumstances of each case,” says Jamie Liddington, Head of Employment at legal firm Hadef & Partners.
“An employee who is dismissed arbitrarily can expect to receive an award of compensation to include (among other contractual entitlements) – payment in lieu of any unpaid part of the notice period; payment in lieu of accrued but untaken annual leave; up to three months’ wages as compensation for arbitrary termination and end of service gratuity,” he told Emirates 24|7.
“Each employee’s notice period should be written in the contract of employment. All employees must be paid their full salary and benefits for the duration of the contractual notice period until their termination date,” says Thenji Macanda, Senior Associate at Taylor Wessing (Middle East) law firm.
What the law says
As per Macanda, if no notice period is specified in the contract of employment, then according to Article 117 of the UAE Labour Law, at least 30 days’ written notice should be provided. This period differs for daily paid workers who have been employed for less than 5 years.
“Article 118 of the UAE Labour law states that a contract of employment will continue to be valid for the notice period and the parties cannot agree to reduce or dispense with the notice period. If, however, an employer reduces the notice period and terminates the employee before the end of the notice period then in accordance with Article 119 of the UAE Labour law, the employee must be paid compensation in lieu of notice equivalent to the notice period. The parties can increase the notice period and if this is done, then the employee must be paid their contractual pay for the duration of the notice,” she elaborates.
When can your employer forfeit your termination compensation?
The law fully protects workers in the country but there are certain clauses under which there will be notice period from the employer’s side and subsequently no payments.
Liddington clarifies that employees who are dismissed “for cause” (under Articles 88 or 120 of the Labour Law) will not be entitled to receive notice of termination (or payment in lieu of notice) and they are likely to forfeit the end of service gratuity.
Contract letter v/s Labour Law – what will hold?
What will hold - the contract letter that is signed between the employer and the employee or the labour law of the country in case of termination? Again, there is no clear cut verdict that can be followed here but the courts usually uphold the one that is more favourable to employees.
“Where there is inconsistency or conflict between the company supplementary contract and the Ministry of Labour contract/free zone contract, the courts tend to favour the employment contract that is more favourable to the employee,” says Macanda.
“As an example, if the company supplementary contract sets out a two month notice period (which is over and about the one month statutory notice set out in the Labour Law), the company will be held to the longer notice period of two months. We always recommend to employers that they should strive to ensure that the all contracts mirror each other as far as possible to avoid uncertainly,” she adds.
The Hadef expert says ideally, the Labour courts will allow the employee to rely on whichever (contract or Labour Law) is most favourable.
“Both the standard form (Ministry of Human Resources and Emiratization or free zone) employment contract and any supplemental private contract are potentially enforceable documents and to the extent that the terms of any contract are less advantageous to the employee than the Labour Law, they will not be valid or enforceable.
“In the event that the terms of the contract(s) are more favourable than the Labour Law, the courts will apply the more favourable contractual term. Where the terms of the standard form contract conflict with the terms of the private contract, the courts’ approach is to allow employees to rely on the more favourable of the two conflicting terms,” he adds.