‘What are the guidelines for calculating gratuity for limited contract?’

QI have been working in a hospital as a registered nurse since May 2014. My first two contracts were unlimited and after finishing the second term, the hospital’s management renewed it as a limited labour contract. I have now resigned and am on a two-month notice period. I need guidance on my gratuity

calculation. The hospital management has calculated it as 14 days multiplied by four years (for the completed unlimited contract period) but I have completed five years and four months in total. What do you think the right calculation is? My employer has also asked me to pay two months of full salary as a penalty since I am resigning without completing the limited contract. Is this right? JM, Abu Dhabi

AThis is a private hospital, so the UAE Labour Law applies. JM states he had two unlimited contracts but an unlimited contract has no end date so this cannot be the case. Unlimited contracts are open ended and cannot be renewed. It therefore sounds as if he was on limited contracts and is now in his third one. As he was happy to renew, this is somewhat academic, however, a limited contract is relevant in terms

of calculating the penalty for leaving employment.

No matter the nature of the contract, the period of employment that should be used for calculating an end-of-service gratuity is the job’s start date, or strictly the date a visa is issued, until the last day of service. In this case it is five years and four months. As this is in excess of five years, the full calculation is applicable. Per Article 132 of the law: “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 21 days for each of the first five years of service. 2. The wage of 30 days for every additional year.” This will be 21 days of basic pay for the first five years and then 30 days for any additional years, calculated pro-rata, for the extra period of four months.

Where an employee breaks the fixed-term contract, a penalty is payable. However, it is not two months’ salary so the hospital is incorrect. This is clearly set out in Article 116 of UAE Labour law which states: “Should the contract be rescinded by the worker … the worker shall be bound to compensate the employer for the loss incurred thereto by reason of the rescission of the contract, provided that the amount of compensation does not exceed the wage of half a month for the period of three months, or for the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract.” A contract cannot penalise an employee for more than the statutory amount, so JM is liable to pay a penalty equivalent to 45 days of total pay. I applied for a bank account with Emirates NBD earlier this month and made it very clear I needed the chequebook by the end of that week. This was because I was about to move apartment and my new landlord was insisting on payment by cheque. The bank representative promised that the chequebook would be delivered by the deadline but I still haven’t received it. I am going to lose my deposit if this isn’t resolved quickly. What should I do? AH, Dubai

I contacted Emirates NBD and asked if they could resolve this. Time was short, with the holiday season coming up, but the bank’s head office got on the case straight away and the required chequebook was delivered within a couple of hours. AH was delighted and the bank deserves a pat on the back for acting so quickly.

A spokeswoman for Emirates NBD said: “We are pleased to inform you that our Group Customer Experience team contacted Ms AH and addressed her request and the matter has been resolved. Ms AH’s account was opened on August 7, 2019. As per the Bank’s policy, the delivery of debit card and chequebook follows within two to three business days, in a welcome pack. However, on an exceptional basis and to accommodate the customer’s request, the bank has arranged to expedite the delivery of the chequebook. Furthermore, the debit card shall be delivered to the customer separately.”

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 25 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @ FinancialUAE. The advice provided in our columns does not constitute legal advice and is provided for information only