Category: Blog

  • Top 9 Valid Reasons Your Employer Denies Gratuity Payment in UAE 2025

    Gratuity is a key benefit for employees in the UAE. It’s a payment from your employer when your job ends, rewarding your service. But sometimes, employers deny gratuity payments. Knowing the valid reasons for such refusals can help you understand your rights. This guide lists the top 9 reasons your employer might legally deny gratuity in the UAE, updated for 2025. We’ll use simple language and provide actionable advice to avoid disputes.

    UAE Labour Law document

    What is Gratuity in the UAE?

    Gratuity, or end-of-service benefits, is a mandatory payment under UAE labor law. It’s given to employees who complete at least one year of service. The amount depends on your basic salary and years worked. However, certain conditions allow employers to withhold this payment legally.

    Key Points:

    • Eligibility: You need at least one year of continuous service.
    • Calculation: Based on basic salary, excluding bonuses or allowances.
    • Contract Types: Rules vary for limited (fixed-term) and unlimited (open-ended) contracts.

    Top 9 Valid Reasons for Gratuity Denial

    Here are the nine most common legal reasons your employer may deny gratuity in the UAE, based on UAE Labor Law (Federal Decree-Law No. 33 of 2021) and insights from top-ranking sources.

    1. Less Than One Year of Service

    You must work for at least one year to qualify for gratuity. If you leave before completing 12 months, your employer can legally deny payment. This rule applies to both limited and unlimited contracts.

    Example: If you resign after 10 months, you get no gratuity.

    2. Resignation Without Notice (Unlimited Contract)

    For unlimited contracts, you must serve the notice period (30–90 days, as per your contract). Resigning without notice or without valid reasons (e.g., employer breach or assault) allows your employer to withhold gratuity.

    Tip: Always provide written notice to avoid this issue.

    3. Early Termination of Limited Contract

    If you’re on a limited contract and resign before its term ends, you may lose your gratuity. You must complete the full contract term unless you have five or more years of service.

    Example: Leaving a two-year contract after one year typically forfeits gratuity.

    4. Termination for Misconduct (Article 120)

    Employers can deny gratuity under Article 120 of UAE Labour Law if they fire you for serious misconduct. These include:

    • Using a false identity or forged documents is considered serious misconduct.
    • Causing significant financial loss to the employer.
    • Violating workplace safety rules.
    • Disobeying instructions after warnings.
    • Committing acts of moral turpitude (e.g., theft, fraud).
    • Being intoxicated or absent without valid reason.

    5. Working for Another Employer During Leave

    Article 88 of UAE Labour Law prohibits working for another employer during annual or sick leave. If caught, your employer can terminate your contract and deny gratuity.

    Tip: Avoid side jobs during leave to protect your benefits.

    6. Reduced Gratuity for Short Service (Unlimited Contract)

    If you resign from an unlimited contract with 1–5 years of service, your gratuity may be reduced:

    • 1–3 years: 1/3 of the full amount.
    • 3–5 years: 2/3 of the full amount.
    • 5+ years: Full gratuity.

    Example: With 2 years of service, you get only one-third of the calculated gratuity.

    7. Failure to Meet Contract Obligations

    If you violate contract terms, such as not performing basic duties despite warnings, your employer may terminate you and withhold gratuity. This falls under Article 120.

    Tip: Review your contract to understand your obligations.

    8. Damage to Employer Property

    Causing deliberate or negligent damage to company property can lead to gratuity forfeiture. The deduction is proportional to the damage caused, as per UAE Labour Law.

    Example: Breaking equipment due to negligence may reduce your gratuity.

    9. Termination During Probation

    If you’re terminated during your probation period (typically 6 months), you’re not entitled to gratuity, even if you’ve worked for part of a year.

    Note: Probation rules are strict, so clarify terms when joining a company.

    Table: Summary of Gratuity Denial Reasons

    ReasonContract TypeLegal BasisAction to Avoid
    Less than 1 yearBothArticle 51Complete 1 year
    No notice (unlimited)UnlimitedArticle 117Serve notice period
    Early exit (limited)LimitedArticle 116Complete contract term
    MisconductBothArticle 120Follow workplace rules
    Work during leaveBothArticle 88Avoid side jobs
    Short serviceUnlimitedArticle 132Work 5+ years
    Contract violationBothArticle 120Meet contract terms
    Property damageBothLabour LawHandle equipment carefully
    Probation terminationBothLabour LawClarify probation terms

    What to Do If Your Gratuity Is Denied

    If your employer denies gratuity, follow these steps to resolve the issue:

    1. Check Your Eligibility: Please ensure that you have fulfilled the one-year service requirement and adhered to all contract terms.
    2. Talk to HR: Request a written explanation for the denial.
    3. Gather Documents: Please gather your contract, salary slips, and termination letter.
    4. Contact MOHRE: File a complaint via the MOHRE website or call 800-84. They can mediate disputes.
    5. Seek Legal Advice: If unresolved, consult a UAE labor lawyer or file a case in the Labour Court.

    Common Misconceptions About Gratuity Denial

    • Myth: Employers can deny gratuity for any reason.
      Fact: Denials must align with UAE labor law, such as Article 120 violations.
    • Myth: You lose gratuity if the company goes bankrupt.
      Fact: Gratuity is a legal obligation, even in bankruptcy.
    • Myth: Domestic workers don’t get gratuity.
      Fact: After one year of service, they receive one month’s salary annually.

    2025 UAE Labour Law Updates

    As of 2025, the UAE Labor Law (Federal Decree-Law No. 33 of 2021) remains the framework for gratuity. Key points:

    • All contracts are now limited (up to 5 years), but gratuity rules are unchanged.
    • Gratuity is calculated as 21 days’ pay per year for the first 5 years and 30 days’ pay per year thereafter.
    • New end-of-service schemes for UAE citizens may not affect expatriates.

    Frequently Asked Questions (FAQs)

    No, poor performance alone isn’t a valid reason unless it involves misconduct under Article 120.

    You may lose gratuity unless you’ve served 5+ years or the contract term is complete.

    Visit the MOHRE website, submit a complaint with your contract and salary details, or call 800-84.

    No, gratuity payments are tax-free in the UAE.

    Conclusion

    Understanding why your employer might deny gratuity in the UAE helps you protect your rights. The top 9 reasons include short service periods, misconduct, or contract violations. Always review your contract and follow UAE Labour Law rules to avoid issues. If your gratuity is denied, contact MOHRE or seek legal advice. Use tools like the UAE Gratuity Calculator to estimate your entitlement and plan your finances.

  • Jafza Gratuity Rules and Calculator 2025: Everything You Need to Know

    Are you an employee or employer in Jebel Ali Free Zone (Jafza) wondering about Jafza Gratuity Rules? Do you want to calculate your end-of-service benefits accurately? This guide covers Jafza gratuity rules, eligibility, and how to use a gratuity calculator. We’ll make it simple and clear. You’ll find actionable tips and answers to common questions. Let’s dive in!

    What Are Jafza Gratuity Rules?

    Jafza, or Jebel Ali Free Zone, follows UAE labor laws for gratuity. Gratuity is a payment employees receive at the end of their service. It’s a way to reward their work. Here’s what you need to know.

    Key Jafza Gratuity Rules

    • Minimum Service Requirement: You need at least one year of continuous service to qualify.
    • Based on Basic Salary: Gratuity uses your last month’s basic salary, not allowances like housing or transport.
    • Service Duration Matters: The amount you get depends on how long you worked.
      • First 1-5 years: 21 days of basic salary per year.
      • More than 5 years: 30 days of basic salary per year after the first 5 years.

    For unlimited contracts with resignation after one year, you get full gratuity. For limited contracts, gratuity applies if you complete the term or face unfair dismissal.

    How to Calculate Gratuity in Jafza

    Calculating gratuity can seem hard, but it’s straightforward. Use these steps and the Jafza gratuity calculator for accuracy.

    Gratuity Calculation Formula

    Here’s how to do it:

    • Find Your Daily Salary: Divide your monthly basic salary by 30 (days in a month).
    • Apply the Rate: Multiply your daily salary by 21 or 30, depending on your service years.
      • For 1-5 years: Daily Salary x 21 x Number of Years.
      • For over 5 years: Daily Salary x 21 x 5 (for the first 5 years) + Daily Salary x 30 x (Additional Years).

    Example: If your basic salary is AED 6,000 and you worked 4 years:

    1. Daily Salary = 6,000 ÷ 30 = AED 200.
    2. Gratuity = 200 x 21 x 4 = AED 16,800.

    Using the Jafza Gratuity Calculator

    Many websites and Dubai Trade offer free online calculators. Here’s how to use one:

    • Enter your basic salary.
    • Input your start and end dates.
    • Select your contract type (limited or unlimited).
    • Choose if you resigned or were terminated.

    The tool gives an instant estimate. It’s fast and accurate.

    Who Is Eligible for Gratuity in Jafza?

    Not everyone gets gratuity. Here are the eligibility rules:

    • You must work continuously for at least one year.
    • Your contract must be limited or unlimited.
    • You can’t be fired for serious misconduct (like fraud).
    • If you resign before one year, you forfeit gratuity.

    Domestic workers and other free zone employees have similar rules, but check specific laws.

    Tips to Maximize Your Gratuity Benefits

    Want to ensure you get what you deserve? Follow these tips:

    • Keep records of your employment contract, salary, and service dates.
    • Understand your contract type (limited or unlimited).
    • Use a reliable calculator to check estimates.
    • Talk to your employer early about gratuity expectations.
    • Consult a labor law expert if there’s a dispute.

    Why Jafza Gratuity Matters

    Gratuity isn’t just money. It’s a safety net. It helps employees plan for the future. For employers, it shows commitment to fair treatment. Jafza’s rules align with UAE laws to protect both sides.

    FAQs

    What Happens If I Resign Before One Year?

    If you resign before completing one year, you won’t get gratuity. Jafza rules are strict on this.

    Can My Employer Refuse to Pay Gratuity?

    No. Employers must pay gratuity unless you were terminated for misconduct. If they refuse, you can file a complaint with the Labour Office.

    Is gratuity taxable in the UAE?

    No. Gratuity in the UAE is tax-free, which is a big benefit.

    Final Thoughts

    Understanding Jafza gratuity rules and using a calculator can save time and stress. Whether you’re an employee planning to leave or an employer preparing payments, this guide helps. Stick to the rules, use the right tools, and know your rights.

  • Can I Resign after 6 months in a UAE Unlimited Contract in the UAE?

    Thinking about resigning from your job after six months under an unlimited contract in the UAE? It’s a significant decision, and it’s natural to have questions or feel uncertain about the legalities and implications. This blog aims to clarify your rights and obligations under an unlimited contract. From understanding labor laws to navigating the resignation process, we’re here to guide you every step of the way.

    By the end of this post, you’ll gain insight into your options, the procedures to follow, and potential consequences, all while ensuring a smooth transition.

    Understanding Unlimited Contracts in UAE

    An unlimited contract is a common type of employment agreement in the UAE. Unlike limited contracts, which have a fixed duration, unlimited contracts are open-ended agreements that provide flexibility for both employers and employees.

    This type of arrangement aligns well with UAE labor laws, designed to balance the rights and responsibilities of both parties. However, this flexibility also means that resignations and terminations come with specific legal obligations that you need to understand.

    Key Features of Unlimited Contracts

    • Duration: There are no fixed timelines for this agreement, meaning the contract will remain in effect indefinitely. It will only end if either party decides to terminate it, following the terms and conditions outlined within the agreement.
    • Notice Periods: Both employers and employees are required to follow legally mandated notice periods when ending an employment relationship. These notice periods typically range from 30 to 90 days, depending on the terms outlined in employment contracts, company policies, or labor laws. They are designed to give both parties sufficient time to prepare for the transition, whether that means finding a replacement or securing a new job opportunity.
    • Gratuity Entitlement: Employees are eligible for an end-of-service gratuity, which is a financial benefit provided upon the completion of their tenure with the company. This gratuity is calculated based on the total duration of their service, ensuring that longer-serving employees receive greater recognition for their contributions.

    Rights and Obligations Under Unlimited Contracts

    Understanding your rights and responsibilities as both an employee and an employer is essential in managing unlimited contracts fairly and lawfully. For employees, this means knowing your entitlements, such as notice periods and job security. For employers, it involves ensuring compliance with labor laws and maintaining clear communication to avoid potential disputes. Familiarity with these aspects helps foster a transparent and balanced working relationship.

    Employee Rights and Obligations

    Under an unlimited contract, employees are entitled to several important rights, but they must also adhere to their obligations.

    Rights of Employees

    • Fair Treatment: Employers are required to treat employees fairly and without discrimination, ensuring that all individuals are given equal opportunities regardless of factors such as race, gender, age, religion, or disability. This includes providing a safe and respectful workplace where everyone is treated with dignity and professionalism.
    • Gratuity Payments: You are entitled to an end-of-service gratuity based on how long you have worked.
    • Notice Period Adherence: Employers cannot terminate your contract without compensation unless the contractually agreed upon notice period has been respected.

    Obligations of Employees

    • Respect Notice Periods: You must provide adequate notice as per your contract before resigning.
    • Work Ethics: Deliver your responsibilities to the standard outlined in your contract until the final day of employment.

    Employer Rights and Obligations

    Employers have a duty to comply with labor regulations while maintaining their operational interests.

    Rights of Employers

    • Notice Compliance: Employers can expect employees to fulfill their notice period unless otherwise agreed upon.
    • Recovery of Costs: When appropriate, employers have the right to recover training or visa expenses incurred for employees.

    Obligations of Employers

    • Transparency in Contracts: Employers must clearly outline terms and conditions in the employment contract.
    • Salary and Benefits Payment: Employers must pay outstanding dues, including gratuity and unused leave encashments, on termination of employment.

    Resigning After 6 Months in an Unlimited Contract

    If you’re seeking to resign after just six months in an unlimited contract, it’s crucial to consider certain aspects that might impact your decision.

    Can You Resign After 6 Months?

    Yes, employees can resign after six months under an unlimited contract. However, doing so comes with legal, financial, and professional implications.

    Depending on the terms outlined in your employment contract and UAE labor laws, the following may apply:

    • You may need to provide a valid reason for resignation.
    • A specific notice period (30–90 days) is usually required.
    • Exiting prematurely may affect your gratuity or financial settlements.

    Factors to Consider Before Resigning

    Before deciding to resign, evaluate the following key factors to avoid unforeseen challenges.

    • Contract Terms: Review your employment agreement for any restrictive clauses.
    • Financial Impact: Analyze how resigning could affect your finances, especially if your company has incurred visa or relocation expenses.
    • Labor Ban: Depending on circumstances, a labor ban might apply when resigning. This is less common now, but it’s worth confirming.

    Alternatives to Resignation

    If you’re feeling stuck, outright resignation might not be your only option. Consider these alternatives for a more balanced approach.

    • Transfer of Employment: Explore opportunities to transfer to a different department or role within the same company.
    • Discuss Grievances: If dissatisfaction is the core issue, an open conversation with your manager or HR department could help address concerns.

    How to Resign from an Unlimited Contract

    If resignation feels like the best decision after weighing your options, follow these steps to ensure a smooth and lawful exit.

    Notice Period Requirements

    The first and most crucial step in resigning from an unlimited contract is serving your notice period.

    • Ensure the notice period length aligns with what’s stipulated in your contract—this is typically 30-90 days.
    • Continue fulfilling your job responsibilities during this time to maintain professionalism.

    Proper Documentation and Procedures

    Proper documentation ensures a seamless resignation process.

    • Submit a Formal Resignation Letter: Include your reason for resigning, your notice period, and your proposed last working day.
    • Request clearance formalities: This includes returning company assets and ensuring your exit is documented correctly.

    Legal Implications of Resigning Before Completing the Notice Period

    Failing to comply with your notice period could result in penalties or legal action. Employees are advised to follow the agreed-upon timelines to avoid such issues.

    Employee Settlement upon Resignation

    Before exiting, ensure all financial matters are resolved.

    Typically, you’ll receive:

    • Final Salary Payment for your last month of service, including any overtime compensation.
    • Gratuity Settlement if eligible.
    • Leave Encashment for unused annual leave days.

    FAQs

    Will I face a labor ban for resigning after 6 months?

    While labor bans are less common now following legal updates in the UAE, specific circumstances may still invoke a ban. Always check with your employer or legal advisor for clarity.

    Can I leave my job without a notice period?

    Leaving without serving a notice period could lead to penalties unless an agreement is reached with your employer.

    Am I entitled to gratuity if I resign within 6 months?

    Gratuity entitlement typically applies after at least one year of service.

    Taking the Next Step

    Resigning after six months of an unlimited contract in the UAE is possible but requires thoughtful planning and adherence to legal obligations. By understanding your rights, adhering to notice periods, and following proper procedures, you can handle your resignation professionally and confidently.

    If you need personalized advice, consult with a labor expert or HR professional to help you make the best decision for your unique circumstances.