In UAE, 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.
UAE Labour Law 2019
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