Can Employer keep basic Salary Low to avoid high Gratuity?
Can my employer (company) keep employee (worker) basic
salary low to avoid a high gratuity payout in UAE?
It is an unfair practice by the employer
(company, HR, Boss) to keep their end-of-service-benefit (gratuity) liability
as low as possible. There is nothing in UAE Labour Law that specifies
the split between basic salary and allowances, so it is at the discretion of
the company. The gratuity is calculated on the final basic salary, so companies
should not keep this artificially low to reduce their future liabilities.
The general expectation is a basic salary is not being less than 60% of the total. If it is less than 50% (per cent), however, the employee (worker) would have a strong claim for unfair treatment with the Labour Court if they choose to challenge it.
Seek advice from the Ministry of Human
Resources and Emiratisation [MoHRE] without delay to obtain their view on the
situation and how they would expect any case to be dealt with. They can be
contacted via any of the TASHEEL offices, TAWAFUQ Center or via the helpline number 8800 665.
Regarding gratuity rules,
please note that it is clearly mentioned in UAE LABOUR Law Article 138 that if
employee have not completed his/her Limited Contract period as signed in
Agreement, he/she will not be eligible for any Gratuity, also As per UAE LABOUR
Law Article 132, Section 2, if worker Resigns with less than a year of service,
he/she will not get any gratuity.
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