Whether you have chosen to resign or have been terminated from your job, both situations can be highly stressful, leaving you feeling uncertain and worried about your future.
Fortunately, in the United Arab Emirates (UAE), the Labour Law and the Ministry of Human Resources and Emiratisation (MOHRE) have established well-defined regulations to protect employee rights and have implemented schemes to enhance financial security for workers.
Now, let’s dive into the details of the monetary benefits and compensation that you are entitled to under the law.
1. New savings scheme – ‘Voluntary Alternative End-of-Service Benefits’
In the UAE, private sector workers now have the opportunity to receive a more substantial end-of-service gratuity when their work contract is terminated, provided they are enrolled in the new alternative end-of-service benefits system.
This savings scheme, aptly named, offers an alternative to the gratuity system that workers are entitled to under the UAE Labour Law. It is important to note that participation in this scheme is voluntary. The scheme allows employees, whose employers have registered them in approved funds, to invest their end-of-service gratuity benefits. This investment enables them to receive returns upon the completion of their service.
This groundbreaking scheme was introduced in November 2023, aiming to enhance the financial security and prospects of private sector workers in the UAE.
Who signs up for the scheme?
Companies must subscribe to the scheme through MOHRE (Ministry of Human Resources and Emiratisation) and subsequently select the employees they wish to register. Once your employers have registered you, they will be required to make monthly contributions to the designated investment fund.
What happens to the worker’s previous gratuity?
According to the Ministry of Human Resources and Emiratisation (MOHRE), companies are required to cease using the existing end-of-service benefits system once they are registered in the new scheme. However, the employees’ entitlements up until that point, as calculated under the gratuity provisions of the UAE Labour Law, will be safeguarded.
When does the employee receive investment returns from the savings scheme?
If you are enrolled in the scheme and lose your job or are terminated, you are entitled to receive the investment returns from this scheme within 14 days, as stated in Cabinet Resolution No. 96 of 2023.
2. Gratuity for full-time private sector workers in UAE
While the alternative end-of-service benefit scheme mentioned above is a recent addition and only applicable to specific workers, all employees in the private sector of the UAE are entitled to receive an end-of-service gratuity, commonly referred to as severance pay. This gratuity is determined based on the number of years an individual has served in the UAE.
According to Article 51 of the UAE’s Labour Law, you are eligible for a gratuity payout if you have completed at least one year of service.
How does one calculate gratuity?
To calculate your gratuity, it is essential to first determine your basic salary. Once you have this information, you can proceed with the calculation based on the number of years you have served in the company.
Here is a breakdown of the gratuity entitlements based on the length of service:
- If you have served for less than one year, you are not eligible for any gratuity payment.
- If your service period ranges from one year to less than five years, you are entitled to a gratuity payment equivalent to 21 days’ basic salary for each year of work.
- If you have served for more than five years, you are entitled to a gratuity payment of 30 days’ basic salary for each year of work beyond the initial five years.
It is important to note that the total gratuity amount should not exceed the equivalent of two years’ wages.
Once you have determined your basic salary and the duration of your employment, you can proceed to calculate your gratuity accordingly.
Furthermore, it is crucial to understand that any days of absence from work without pay will not be considered when calculating the length of your service.
By following these guidelines, you can accurately calculate your gratuity entitlements based on your years of service and ensure you receive the appropriate payment.
When should one receive the gratuity?
According to Article 51, it is the responsibility of the employer to ensure that the worker receives their remuneration and all other entitlements within 14 days from the termination of their contract. If your gratuity payment is delayed, you have every right to file a labor complaint.
It is important to note that the calculations provided above are specifically for expatriate workers in the private sector. As stated on u.ae, the UAE’s official online information platform, end-of-service benefits for Emiratis employed in the private sector will be determined by the legislation governing pensions and social securities in the UAE.
3. Unemployment Insurance Scheme
The Involuntary Loss of Employment (ILOE) scheme is a vital form of insurance or social security designed to safeguard workers in both the federal and private sectors. Its primary objective is to provide financial protection to employees who have been terminated, as long as they have not voluntarily resigned or been dismissed due to disciplinary reasons.
To qualify for compensation, employees must have been enrolled in the scheme for a minimum of 12 consecutive months.
It is important to note that participation in the ILOE scheme is mandatory, and the premium for the insurance policy must be paid by the employee. However, there are various subscription options available, including monthly, quarterly, semi-annual, or annual payments.
By implementing the ILOE scheme, we aim to alleviate the financial burden faced by terminated employees and offer them a safety net during this challenging period. This initiative not only provides peace of mind to workers but also promotes a sense of security and stability within the workforce.
We understand the importance of protecting employees from unforeseen circumstances and believe that the ILOE scheme is a crucial step towards achieving this goal. By offering a maximum of three cash compensation, we strive to support individuals during their transition period and help them regain their footing in the job market.
In conclusion, the ILOE scheme serves as a valuable safety net for workers, ensuring that they are not left vulnerable in the event of involuntary job loss. Through its mandatory nature and flexible subscription options, we aim to provide comprehensive coverage and peace of mind to employees across various sectors.
When do workers receive the ILOE cash compensation?
To be eligible for compensation, you must meet all the necessary conditions and not have resigned or been terminated due to disciplinary reasons. It is crucial to submit your claim within 30 days after the termination of your employment.
Once you have successfully submitted your claim, licensed service providers authorized by the UAE’s Central Bank to offer insurance policies are obligated to make the payment within two weeks of receiving your claim.
4. Repatriation ticket
If your work contract has ended and you intend to return to your home country, it is important to note that your employer is legally obligated to cover the cost of your flight ticket.
According to Article 13 of the UAE’s Labour Law, a repatriation ticket is only provided in the event of termination from employment. If you have voluntarily resigned, switched to another company, decided to remain in the UAE, or have been terminated due to misconduct, you will not be entitled to a paid ticket back home.
It is crucial to understand your rights and obligations as an employee in the UAE. In the case of contract expiration, your employer bears the responsibility of arranging and financing your return journey. This provision ensures that employees are not burdened with the financial implications of their departure.
By adhering to the regulations outlined in the Labour Law, employers are required to fulfill their legal obligations and provide the necessary support to their employees. This not only promotes fairness and transparency in the employment relationship but also safeguards the rights of individuals working in the UAE.
Therefore, if you find yourself in a situation where your work contract has come to an end and you plan to relocate to your home country, it is essential to be aware of your entitlements. By familiarizing yourself with the provisions of Article 13, you can ensure that your employer fulfills their responsibility of covering the expenses associated with your repatriation.
In conclusion, understanding the legal framework surrounding repatriation tickets in the UAE is crucial for both employers and employees. By upholding these regulations, employers can demonstrate their commitment to their workforce, while employees can rest assured that their rights are protected.
Also Read: How does the new UAE end-of-service benefits scheme affect employees?