UAE Labour Law: 11 Reasons Why Your Employer Denies Gratuity Payment

UAE Labour Law

As per UAE Labour Law, the employer needs to pay gratuity in 14 days from resignation or termination of an employee. But for some valid reasons, the employer can deny the payment of gratuity.

So, it is important to know the reasons and check them with the UAE Labour Law to resolve the dispute. If your employer has denied to provide your gratuity, you should talk to him first and then take an appropriate action.

11 Reasons Why Your Employer Denies Gratuity Payment

Gratuity is the end-of-service benefit and the right of every employee working in the UAE. But sometimes the employer can deny to settle the gratuity payment for one or more reasons.

Here I am sharing some valid reasons for which the employer can refuse to pay gratuity to the employee after resignation or termination or end of contract.

  1. The employee has not completed minimum one year of service required for the gratuity entitlement in the UAE.
  2. The employer has dismissed the employee for disciplinary reasons and the employer has a valid evidence to prove that.
  3. The employee was hired under a fixed-term contract that makes him/her eligible for gratuity only after completing 5 years of service but the employee’s service period is less than 5 years. [Article 138]
  4. The employee was hired under an unlimited contract and s/he has resigned without giving a prior notice or quit without serving the notice period. [Article 139b]
  5. The employer can dismiss an employee and deny to pay gratuity after termination if the employee remains absent for 7 consecutive days in a month or 20 consecutive days in a year without notifying the employer with a valid reason. [Article 120]
  6. The employee has submitted false identity and nationality or fake certificates at the time of joining. On realization of facts, the employer has dismissed the employee, denied to pay gratuity and claimed penalty from the employee. [Article 44]
  7. The employee has violated the company’s rules by harassing other employees or assaulting coworkers or performing illegal activities.
  8. The employee did not follow the safety rules at work that caused material loss or damaged company’s property even after the employer had notified and explained the safety rules earlier.
  9. The employee has worked with the other company during sick leave or annual leave. It is called the violation of the employment/labour contract that makes the employee ineligible for the end-of-service benefits including gratuity. [Article 88]
  10. In a legal case, the Jury’s Verdict has declared that the employee is convicted in a case of fraud or dishonesty or unethical activities or has revealed company’s confidential information to outsiders. Then the employer dismissed the employee and refused to pay gratuity. [Article 40]
  11. The employee was found drunk (alcohol) and/or under the influence of narcotic or psychotropic substances at the workplace.

If the employer denies to pay gratuity to the employee for one of the 11 reasons shared above, it is correct as per the UAE Labour Law. In all other situations, the employer must pay gratuity to the employee within 14 days of resignation/termination.

How Can an Employee Calculate Gratuity?

An employee can calculate gratuity with help of the Online UAE Gratuity Calculator without any confusion. There is no need to learn the gratuity formula, simply enter the basic pay, choose contract type and number of service years to find out the gratuity amount in less than one minute.

What Can an Employee Do If the Employer Denies Gratuity Payment?

If the employer denies gratuity payment, the employee should respond with 3 steps given as under;

#1. Talk to the Employer:

The employee should meet the employer (or HR head) personally to discuss about gratuity. It will help the employee to know the reasons for which the employer has denied to pay the gratuity.

After discussing with the employer, the employee should analyze the reasons given by him (employer). If the employee is unable to understand the legality of denial of gratuity, s/he should take the next step.

#2. Consult a Legal Advisor:

The employee should consult an experienced legal advisor to discuss about the gratuity issue. The legal advisor can help the employee to know if the employer’s reasons to deny gratuity payment are valid/legal or not.

If the employer’s reasons are not valid according to UAE Labour Law, the legal advisor will guide the employee on how to file a complaint against the employer. Read the next step to understand it better.

#3. File a Complaint to UAE Labour Department:

If the employer’s reasons for denying gratuity payment are not valid, the employee must file a complaint against the employer. The employee can file a complaint at the Labour Law Office or MOHRE website @www.mohre.gov.ae or MOHRE call center 600-590000.

Conclusion

The gratuity is a legal right of every employee working in the United Arab Emirates. But the employer can deny gratuity payment with one or more valid reasons that prove that the employee is not entitled for gratuity.

So, the employee must know the Labour Law Rules in UAE and follow them strictly while working in a company. Only then the employee can get all end-of-service benefits including gratuity.

FAQs

What does UAE Labour Law say about Gratuity?

The UAE Labour Law states that the employer has to pay gratuity within 14 days from the date of an employee’s termination or resignation or end-of-contract.

What can an employee do if the employer refuses to pay gratuity?

What will happen if the employer does not have money to pay gratuity?

Are free zone employees entitled for gratuity?

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