Severance pay is based on employee’s last basic salary
I’ve been working as a clerk in the UAE for 10 years in a private company on an unlimited contract. I’d signed my labour contract in 2007, where it was stated that the basic salary was Dh2,000 and overtime. My salary has been increased many times since then but my contract was never updated. I am resigning my job, and am unsure how the gratuity will work. Is it still counted as the Dh2,000 mentioned in my salary? Does it include the raises and the overtime accrued over 10 years? It is presumed that you are employed in one of the mainland companies in the UAE under unlimited duration employment contract. And is presumed that your employment contract falls under the jurisdiction of Federal Law No. 8 of 1980 regulating Employment Relations in the UAE (the ‘Employment Law’).
Pursuant to the provisions of the Employment Law, it may be noted that the gratuity/severance pay is generally calculated on the basis of the last basic salary drawn by an employee. This is in accordance with the provisions of Article 134 of the Employment Law which reads as follows.
“Without prejudice to the provisions of certain laws on the pensions and retirement benefits granted to workers in certain establishments, end of service gratuity shall be calculated on the basis of the last wage due to monthly, weekly and daily paid workers, and on the basis of the average daily wage set forth in Article 57 hereof for the workers getting paid by piece. The wage used as a basis for calculating the end of service gratuity shall not include payments made to the worker in housing, transport and travel allowance, overtime pay, representation allowance, cashier’s allowances, children education allowance, allowances for recreational and social services, and any other bonuses or allowances.”
In view of the foregoing provision of the Employment Law, you may try to prevail upon your employer to calculate your gratuity/ severance pay on the basis of your last drawn basic salary only. However, in the absence of an updated employment contract, there may arise some ambiguity, as your current basic salary would actually be more than the basic salary stated on your employment contract which is mentioned as Dh2000. And, in this regard, you may support your claim through letters, pay slips or ‘Wage Protection System’ statement(s) if they clearly state that your last drawn basic salary is more than the amount mentioned in your employment contract.
It may be noted further that the gratuity/severance pay includes raises given on the basic salary only. It does not include raises/ hikes made on any other allowances or bonuses. And further, the gratuity calculation shall also not include ‘overtime remuneration’. However, any overtime remuneration, which may have accrued and remains unpaid till the termination of your employment, shall be payable to you as part of your end of service entitlements.
In conclusion, for good order, the employer and the employee must execute restated employment contracts or amend the employment contract, whenever in principle there is an increase in salary or there is a material change in the existing employment terms.
Flat maintenance is landlord’s responsibility
I just moved out of an apartment after two years, paying my rent on a monthly basis. My contract stated that the landlord is responsible for major plumbing and maintenance costs, but they have taken a sizeable chunk of my Dh9,500 deposit to pay some fees for a leaking pipe, which I consider as a violation of contract. Do I have any legal recourse to get the money back? It’s stealing, in my eyes. Pursuant to your queries, it is assumed that the residential apartment is situated in the Emirate of Dubai. The landlord is responsible for the major maintenance of the apartments and specifically, those related to basic amenities like water and electricity, in accordance with Article 16 of Law No. 26 of 2007 regulating the Relationship between Landlords and Tenants in the Emirate of Dubai, which states: “Unless otherwise agreed by the parties, the landlord will, during the term of the lease contract, be responsible for the real property maintenance works and for repairing any defect or damage that may affect the tenant’s intended use of the real property.”
Further, the landlord should return your security deposit cheque upon termination of your tenancy contract if there is no damage to basic structure of the residential flat, excluding reasonable wear and tear, in accordance with Article 20 of Law No.26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai, which states: “When entering into a lease contract, the landlord may obtain from the tenant a security deposit to ensure maintenance of the real property upon the expiry of the lease contract, provided the landlord undertakes to refund such deposit or remainder thereof to the tenant upon the expiry of the lease contract. You may approach the Rental Dispute Center in Dubai and lodge a complaint against the landlord.