UAE Labor Law: Timeframe for Employer Final Payment Upon Employee Resignation
13 August 2024
Glory Sony
In the United Arab Emirates (UAE), the law mandates a strict timeline for employers to settle all financial dues with employees upon resignation. The timely payment of final dues upon an employee's resignation is a cornerstone of labor rights in the UAE. The following legal articles provide the foundational framework for this matter:
Dubai: This stipulation is enshrined in the UAE Labor Law to safeguard the rights of workers and ensure timely compensation.
Understanding Key Provisions
•14-Day Deadline: Employers are obligated to disburse the complete final payment, encompassing salary, end-of-service benefits, and other entitlements, within fourteen days of the employee's last working day.
•Comprehensive Payment: The final settlement must encompass all financial obligations accrued during the employee's tenure, leaving no room for pending claims or deductions.
•Enforcement: The Ministry of Human Resources and Emiratization (MoHRE) is responsible for enforcing this regulation. Employees who face delays in receiving their final payment can lodge a complaint with the MoHRE.
Components of Final Payment
The final payment to a resigning employee typically consists of the following:
•Unpaid Salary: Wages earned up until the last day of employment.
•End-of-Service Gratuity: This is a significant component of the final payment, calculated based on the employee's salary and length of service. The UAE Labor Law outlines specific criteria for gratuity calculation.
•Paid Leave: Any accrued but unused annual leave is to be compensated.
•Overtime Pay: Any unpaid overtime hours should be included in the final settlement.
•Other Benefits: This may include housing allowances, transportation benefits, or other contractual entitlements.
Consequences of Non-Compliance
Employers who fail to adhere to the 14-day deadline for final payment risk facing penalties imposed by the MoHRE. These penalties can range from financial fines to more severe measures, such as the suspension or revocation of the company's labor license.
Protecting Employee Rights
To safeguard their rights, employees are advised to:
•Maintain Detailed Records: Keep meticulous records of salary, overtime, leave, and other benefits.
•Understand Employment Contract: Familiarize oneself with the terms and conditions of the employment contract.
•Seek Legal Counsel: If faced with difficulties in obtaining the final payment, consider consulting with a lawyer.
•File a Complaint: In case of non-compliance, report the matter to the MoHRE promptly.
Key Legal Provisions
UAE Federal Law No. 8 of 1980 - UAE Labor Law
•Article 113: This article outlines the components of an employee's final settlement, including wages, end-of-service gratuity, and any other benefits due to the employee.
•Article 114: This article specifies the calculation method for end-of-service gratuity based on the employee's length of service and basic salary.
•Article 115: This article details the conditions under which an employee may forfeit their end-of-service gratuity, such as termination due to misconduct or resignation before completing a probationary period.
•Article 120: This article establishes the employer's obligation to settle all financial dues with the employee upon termination of employment.
UAE Cabinet Resolution No. 798 of 2018 - End-of-Service Benefits
This resolution provides further clarification and guidelines regarding the calculation and payment of end-of-service benefits.
Calculation of End-of-Service Gratuity
The end-of-service gratuity is a significant component of the final payment. It is calculated based on the following formula:
•21 days' basic salary for each year of service for the first five years.
•30 days' basic salary for each year of service after the first five years.
Enforcement and Dispute Resolution
The Ministry of Human Resources and Emiratization (MoHRE) is responsible for enforcing the UAE Labor Law and resolving labor disputes. Employees who face delays in receiving their final payment can file a complaint with the MoHRE.
In Conclusion
The UAE Labor Law provides a robust legal framework to protect the rights of employees with regard to final payments upon resignation. By understanding these provisions, employees can effectively advocate for their entitlements and ensure timely settlement of their dues.
ALKETBI TOUCH:
ALKETBI emphasizes the importance of understanding one's legal rights in the workplace. Our team is highly skilled and frequently provides legal assistance specializing in sustaining employees and businesses. ALKETBI advises employees to seek legal counsel when facing delays and abuse and we recommend employees utilize the protections afforded by the UAE law. If you request further advice or have concerns and queries, contact us!
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