Gratuity Rules in UAE for Limited Contract: Know Your Benefits
As an employee in the UAE, it’s important to know what your rights and benefits are, especially when it comes to monetary compensation. One such benefit is gratuity, which is a payment made to an employee at the end of their service. But what are the gratuity rules in UAE for limited contract employees?
Firstly, it’s important to understand what a limited contract is. A limited contract is a type of employment contract that specifies a fixed term of employment, which can range from six months to five years. In contrast, an unlimited contract has no fixed term and can be terminated by either the employer or employee with a notice period.
Gratuity for limited contract employees is calculated based on the length of service, as specified in the UAE Labour Law. According to Article 132 of the law, an employee who completes one year or more in continuous service is entitled to a gratuity payment at the end of their service. The payment is calculated as follows:
– 21 days of basic salary for each year of service, if the employee has completed less than five years of service.
– 30 days of basic salary for each year of service, if the employee has completed five or more years of service.
It’s important to note that the basic salary used in the calculation does not include any allowances or benefits, such as housing or transportation allowances. Additionally, the gratuity payment is based on the last basic salary received by the employee, not any previous salaries or increases.
If an employee with a limited contract terminates their employment before completing one year of service, they are not entitled to any gratuity payment. However, if the employer terminates the contract without a valid reason, the employee is entitled to the gratuity payment for the period of service completed.
If an employee with a limited contract completes their term of employment and signs a new contract with the same employer, the gratuity payment is calculated based on the total length of service, including the previous contract.
It’s important to remember that gratuity is a benefit provided by law and cannot be waived by the employee. Additionally, an employer cannot deduct any amounts from the gratuity payment, except for any outstanding debts owed by the employee.
In conclusion, as an employee with a limited contract in the UAE, it’s important to understand your rights and benefits, including gratuity. By knowing the rules and regulations surrounding gratuity payments, you can ensure that you receive the correct compensation at the end of your service.
