Khaleej Times, Sun, Oct 27, 2024 | Rabi al-Thani 24, 1446
UAE jobs: Can new employee ask to add severance clause to contract?
Emirates:
Question: I work in a company in Dubai and earn a decent salary. A
start-up company has offered me a job that would require me to run that company.
I am very keen to accept the job offer, but I wish to understand what my rights
would be if the company suddenly shuts down. Additionally, can I get a clause
added to the contract to specify a severance amount if the company is to shut
down?
Answer: In the UAE, a foreign employee who has completed at least one
year of continuous service is entitled to end-of-service benefits at the end of
his service.
The amount of these benefits is calculated on the basic salary of an employee.
This is in accordance with Article 51(2) of the Federal Decree Law no. 33 of
2021 Regarding the Regulation of Employment Relationships and its amendments,
which provides for the end of service benefits.
“The full-time foreign employee, who completed a year or more in continuous
service, shall be entitled to end-of-service benefits at the end of his service,
calculated according to the basic salary as per the following:
a. A salary of (21) twenty-one days for each year of the first five years of
service.
b. A salary of (30) thirty days for each year exceeding such period.
Furthermore, Article 8 of the Employment Law read with Article 10 (1) of the
Cabinet Resolution No. 1 of 2022 on the Implementation of Federal Decree-Law No.
33 of 2021 Regarding the Regulation of Employment Relations, states general
terms and conditions which may be included in an employment contract to be
executed between an employer and an employee.
An employer may be penalised if it closes its operations without paying its
employees’ entitlements including end-of-service benefits. This is under Article
60 (1)(d) Federal Decree-Law no. (9) of 2024 Revising Some provisions of Federal
Decree-Law no. (33) OF 2021 Concerning Labour Relations, which states, “1.
Individuals who commit the following violations shall be fined a minimum of
Dh100,000 and a maximum of Dh1,000,000.
- (d). Closure or discontinuation of an establishment without following the
appropriate procedures for settling workers’ dues is a violation of this law,
the Implementing Regulation, and the Resolutions issued to implement it.”
Under the aforementioned provisions of law, you should be entitled to the
end-of-service benefits only after the completion of one year of continuous
employment.
Furthermore, the relationship between an employer and employee is governed
by the employment contract, the provisions of the Employment Law, Cabinet
Resolution No. 1 of 2022 and its subsequent amendment and ministerial
resolutions. Therefore, your end-of-service benefits and other employment
entitlements are protected by the provisions of the Employment Law and its
subsequent ministerial resolutions, and it is not mandatory to mention the
same in your employment contract.
However, for your comfort, you may mutually agree with your employer to add
an appropriate clause in the employment contract relating to your
end-of-service benefits.