No compensatory benefits for terminated employee

As per the labour rules: Upon termination from your employment or job from any of the seven Emirates of UAE, the employer/sponsor company is liable to pay the salary to their employees for the notice period served by him.

Some companies issues termination letter stating that the employee doesn't need to work for the notice period and will be paid in lieu off which means that he/she will get the salary even if they didn't work during the notice period.

Most of the enquiries by the terminated employees are following.

1. Are we eligible to get any extra payment as termination benefits?

2.  Are we eligible to get air ticket for the trip back to home country?

3. Are we eligible for the gratuity. What is the calculation?

What is the Labour rules for free-zone sponsored visas?

Most of the free-zones in UAE follow the procedures of the Federal Law No 8 of 1980 on the Regulation of Labour Relations (“Labour Law”) for labour and employment issues. ,

The employee of a free zone company's relationship lies with the employer with whom he/she had signed an employment contract. The employer will be liable to make final settlement and pay all end-of-service benefits and entitlements to the staff.

If your employment contract is signed for unlimited duration, it may be noted that such contracts can be terminated by either the employer or the employee, giving a prior notice of at least 30 days. This is in accordance with Article 117 of the Labour Law which states:

1. Both the employer and the worker may terminate a contract of employment of unlimited duration for a valid reason at any time following its conclusion by giving the other party notice in writing at least 30 days before the termination.

As such, upon termination of your employment contract, your employer is only liable to pay your salary for the notice period. There are no other compensatory benefits upon termination of a contract of unlimited duration.

Answer to the second question:

The employer/company shall be liable to pay for your airfare upon termination of your employment contract. This is in accordance with Article 131 of the Labour Law which states: An employer shall, on the termination of a worker’s contract, defray the cost of returning him to the district from which he was recruited or to any other place agreed upon between the two parties.

Where after the termination of his contract, a worker enters the service of another employer, the latter shall defray the worker’s travelling expenses on the termination of his service. Subject to the provisions of the preceding sentence, if the employer fails to return the worker or to defray his travelling expenses, the competent authorities shall do so at the employer’s expense and may then recover any expenditure incurred in this connection by attachment.

Where the reason for the termination of the contract is attributable to the worker, his travel shall be at his own expense if he has the wherewithal to pay.”

Answer for third question;

The employee/staff's are entitled to receive severance pay in accordance with the number of years of your employment with the employer. This is in accordance with Article 132 of the Labour Law which states: ‘A worker who has completed a period of one or more years of continuous service shall be entitled to severance pay on the termination of his employment. The days of absence from work without pay shall not be included in calculating the period of service. The severance pay shall be calculated as follows:

1. 21 days’ remuneration for each year of the first five years of service;

2. 30 days’ remuneration for each additional year of service provided that the aggregate amount of severance pay shall not exceed 2 years’ remuneration.”

Accordingly, you shall be entitled to gratuity/severance pay and the amount shall depend on the number of years of your continuous employment with the employer.