Is the compensation for notice period deducted on the basis of full salary or basic salary?

If you decide to resign without completing the notice period, your employer will calculate compensation based on your base salary, excluding allowances, bonuses, or gross salary, which may include other components such as commissions or bonuses.

In the UAE, when an employee resigns without serving their full notice period, the notice compensation is calculated based on the employee's full salary, including both basic salary and allowances.

So employers are entitled to compensation for the entire earnings during the notice period, and it's essential to refer to the employment contract for specific terms and consult HR or legal professionals for clarification if needed.

Notice compensation is intended to compensate the employer for the financial loss they incur due to the employee's abrupt departure.

The UAE Labor Law (Federal Decree-Law No. (33) of 2021) outlines the requirements for notice periods.

However, it doesn't explicitly specify whether compensation should be based on basic salary or full salary. It will depend on the company policy.

Generally, in most cases, notice compensation is calculated based on the employee's basic salary.

Dear Questioner,

Thank you for your inquiry.

Under UAE Labor Law, if an employee resigns without serving their full notice period, they are required to compensate the employer for the remaining period of the notice.

This compensation, known as "notice compensation," is generally calculated based on the employee's full salary, not just the basic salary.

Key Points:

Notice Compensation: The compensation for the notice period is typically calculated on the full salary, which includes both basic salary and any regular allowances, such as housing, transport, and other benefits, as part of the total remuneration package.

Legal Framework: This approach ensures that the compensation reflects the total amount the employee would have earned during the notice period.

Recommendation:

If you are in a situation where you need to resign without serving full notice, it is important to confirm the details with your employer and ensure that the calculation is based on the full salary, not just the basic salary.

Please let me know if you need further clarification or assistance with this matter.

Best regards,

Mohammed Salah

Legal Consultant

Hello, According to UAE Labour Law, if an employee resigns and does not serve the full notice period, they are liable to compensate the employer for the period not worked.

Typically, the compensation is calculated as the equivalent of the employee's salary for the remaining notice period that was not served.

The compensation for the notice period is usually based on the total salary (not just the basic salary) unless the employment contract states otherwise.