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Gratuity calculation will be made easier, minister tells FNC

Gratuity calculation will be made easier, minister tells FNCImage Credit: Supplied

Saqr Gobash Saeed Gobash, Minister of Labour, told the Federal National Council yesterday (Tuesday) there was a need for a resolution to make the calculation of the end of service gratuity easier to protect the rights of workers and employers.

The minister did not speak of a time framework regarding when such a resolution will be taken and whether it will be before the new labour law is issued.

The House was debating policies of the Labour Ministry to control the labour market.

The council demanded that the Government focus on bridging the gap between benefits of the private and public sectors as the public sector employment market is nearly saturated and the Emiratisation quota system in the private sector has failed to meet targets.

Gratuity is calculated on an annual basis if the employee has completed one year of employment with the employer or more.

An employee who completes one year or more in continuous service shall be entitled to gratuity at the end of service. The gratuity shall be calculated as follows: 21 day's wages for each year of the first five years; 30 day's wages for each additional year on condition that the total of the gratuity shall not exceed the wages of two years.

Without prejudice to what is stipulated by some laws in the granting of pensions or retirement benefits to employees, in some establishments gratuity for those who are paid monthly, weekly or daily wages shall be calculated as follows: Basic wage which is taken as a basis for the calculation of gratuity is that which is last received by the employee before the termination of the employment contract. This wage will be the basis for calculating the gratuity for all the years during which the employee works for the employer calculated at the rate advised here above.

A basic wage means anything received by the employee as a wage excluding housing, transport, travelling allowances and overtime, family allowances, entertainment allowances and any other allowances or a bonus.

An employee employed under a contract for an unlimited period who resigned after a continuous service of not less than a year and not more than three years is entitled to one third of the end of service gratuity provided above. If the period of continuous service is more than three years and less than five years he is entitled to two-thirds of the gratuity.

If his continuous service is more than five years, he shall be entitled to the full gratuity.

If an employee who is employed under a contract of limited period and resigned of his free will before the end of the contract, shall not be entitled to the end of service gratuity unless his continuous service exceeds five years.

An employee may also be deprived of his gratuity if he left his job voluntarily without notice. This applies to unlimited period contracts and in cases where the employee did not complete five years of continuous employment in a limited term contract.

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Source: Samir Salama, Associate Editor,