What Will Happen to the Gratuity When an Employee Working in UAE Pass Away?

Gratuity in case of death

Everyone who’s worked for at least one continuous year with a UAE company is eligible for receiving gratuity.

You may now have below questions in your mind about your end of service benefits:

• How is gratuity calculated for a deceased employee?
• Is gratuity payable on death?
• Who is eligible for gratuity after death?

According to Article 132 of UAE Labour Law, As amended by Federal Law no. 12 dated 29/10/1986:

The worker having spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service.

The days of absence from work without pay shall not be included in the calculation of the period of service, and the gratuity shall be calculated as follows:

1 – The wage of twenty-one days for each of the first five years of service.

2 – The wage of thirty days for every additional year.

Always provided that the total gratuity does not exceed the wage of two years.

The end-of-service gratuity is calculated on the basis of the last wage due to monthly, weekly, and daily-paid workers.

The worker shall be entitled to a gratuity for the served fraction of a year, provided that he completes one year of continuous service.

This should be calculated to the date of the employee’s death, which will be deemed the final date of service. The total payment, which is any unpaid salary, the gratuity, plus any days of annual leave owed, are payable to the individual’s beneficiaries.

According to Article 136 – For the purposes of Article 132, cases of employment preceding the coming into force of the present Law shall not be deemed cases for which the worker is entitled to an end of service gratuity with the exception of cases involving nationals, and such without prejudice to any rights acquired by the worker by virtue of revoked labor laws, the employment contract or any agreement, regulations or by-laws of the establishment. In the event of the worker’s death, his end of service gratuity shall be paid to the beneficiaries thereof.

In case of the nonexistence of such beneficiaries, End-of-service and gratuity payments form part of the person’s estate and therefore cannot be distributed by the employer until they have received the Succession Order or further instructions from the Court.

In the case of Muslim expatriates, the gratuity would be subject to the distribution of assets as per Shariah Law.

In order to avoid any confusion in the event of the death of an employee, all employers should keep a record of their employee’s next of kin and also who is the preferred beneficiary in respect of any monetary payments.