Questions & Answers
Calculation of the end of service benefits upon resignation
Dear Sir,
I am working in a Hospital as a Registered Nurse from 11.05.2014.
My first two labour contracts were unlimited labour contract and after finishing the second contract term, the hospital management renewed the labour contract with a new limited labour contract.
I have resigned from the hospital now and I am in the 2 months notice period as per contract. I like to know about the calculation of my gratuity amount.
As per the hospital management, they calculate the gratuity as 14 days x 4 years (for the completed unlimited contract period).
Whereas I have completed total 5 years and 4 months period in total with the hospital (4 years with unlimited contract and 1 year and 2 months with limited contract).
Kindly confirm this gratuity calculation is correct as per the UAE labour law.
Also, the hospital management asked me to pay a two-months full salary as a penalty since I am resigning without completing the limited contract.
I am awaiting your valued reply.
Good Day
I will tell you about the UAE law so you can check and calculate.
An employee who has 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:
- If an employee has served for less than 1 year, he is not entitled to any gratuity pay.
- If an employee has served for more than 1 year but less than 5 years, he is entitled to full gratuity pay based on 21 days' salary for each year of work.
In the event where the employer terminates an unlimited contract, the calculation will be as follows:
- If an employee has served for less than 1 year, he is not entitled to any gratuity pay.
- If an employee has served more than 1 year but less than 5 years, he is entitled to 21 calendar days' basic salary for each year of the first five years of work.
- If an employee has served more than 5 years, he is entitled to 30 calendar days' basic salary for each additional year, provided the entire compensation does not exceed two years' pay.
In the event where the employee under an unlimited contract resigns, the calculation will be as follows:
- If an employee resigns before completing 1 year of service, he is not entitled to any gratuity pay.
- If an employee has served between 1 and 3 years, he is entitled to one third (1/3) of 21 days' basic salary as gratuity pay
- If an employee has served between 3 and 5 years, he is entitled to two-thirds (2/3) of 21 days' basic salary as gratuity pay
- If an employee has served more than 5 years, he is entitled to full 21 days' basic salary as gratuity pay
They are asking you to pay a two-months full salary as a penalty since you're resigning without completing the limited contract.
Check your contract if have an article stating that.
