When is Gratuity / EOSB not applicable?
Gratuity or End of Service Benefits is the right of every employee who works in UAE under UAE Labour Law. However, there are exceptions to when Gratuity may not be applicable and UAE Labour Law provides for specific scenarios when the gratuity need not be paid by the employer to the employee.
Below Articles will provide you the details:
ARTICLE (138) – Under Limited Contract
If an employee under a contract with limited period leaves his work at his own option before the end of the contract period he shall not be entitled to end of service gratuity unless the period of his continuous service exceeds five years.
Note: As per this Article, if you work under Limited Contract and have resigned(terminated your contract) before completing 5 years of continuous service, you will not be eligible for Gratuity. I know that this is contradiction of Gratuity calculation. However, since this is clearly written in the UAE Labour Law, companies could adhere to this. I know of companies who do not follow this Article and do pay their employees who resign before completion of 5 continuous years of employment under Limited Contract.
ARTICLE (139): If dismissed under Article 120 / Article 121 (Employee and Employer)
The employee shall be fully deprived of the end of service gratuity in any of the following cases:
a. if he is dismissed from service for any reason in accordance with Article (120) of this Law or if he leaves his work to avoid dismissal in accordance with the provisions of this Article.
Reasons for Termination under Article 120:
1. If the employee adopts a false identity or nationality or if he submits forged documents or certificates.
2. If the employee is appointed under a probationary period and dismissal occurred during or at the end of said period.
3. If he commits an error causing substantial material loss to the employer provided that the latter advises the labour department of the incident within 48 hours from having knowledge of the same.
4. If the employee violates instructions concerning safety of the place of business provided that such instructions are displayed in writing at conspicuous places and in case of an illiterate employee the latter be informed verbally of the same.
5. If he fails to perform his basic duties under the contract of employment and persists in violating them despite formal investigation with him in this respect and warning him of dismissal if the same is repeated.
6. If he divulges any secrets of the establishment where he is employed.
7. If he is awarded final judgement by the competent court in respect of an offence prejudicing honour, honesty or public morals.
8. If during working hours he is found drunk or under the influence of drug.
9. If in the course of his work he commits an assault on the employer, the manager or any of his colleagues.
10. If he absents himself without lawful excuse for more that twenty intermittent days or for more than seven successive day during one year.
b. If he leaves his work willingly and without notice in cases other than those enumerated in Article (121) under this law with respect to unlimited period contracts or before he completes five years of continuous service with respect to limited period contracts.
Reasons for Termination under Article 121:
a. If the employer does not fulfil his obligations towards the employee as provided for in the contract or in this Law.
b. If the employer of his legal regal representative has committed an act of assault against the employee.
You as an employee should be aware when you are not eligible to receive your gratuity.
Many a times, employees accept whatever the employer says and then get into trouble when they are made aware of the Labor Law. It is very important that you read and understand UAE Employment Law while you are still employed. Lest you could be too late. Even I have found certain “HR Employees” not aware of key concepts of UAE Labour Laws and other laws pertaining to it.
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