The new gratuity law in the UAE for 2024 has left many employees confused about what it entails and how to calculate it. However, there is no cause for alarm as this article provides a comprehensive guide on everything you need to know about the UAE’s new labor law gratuity for 2024.
Readers will learn about the new gratuity law in the UAE for 2024, how to calculate it, the requirements that must be met before receiving gratuity, and what to do if their employer refuses to pay their gratuity. This article is written in a confident, knowledgeable, and neutral tone, providing readers with clear and concise information on the topic.
What is the New Gratuity Law in the UAE 2024?
The New Labor Law in the UAE, effective from 2024, has introduced changes to the gratuity calculation for workers. The law states that all contracts are limited to a maximum of five years. The gratuity calculation is based on 21 days of the basic salary for each year of service for the first five years of employment. For every additional year beyond the first five that a worker has worked for the same company, they will receive 30 days’ worth of their basic pay.
To illustrate, if a worker has worked for a company for six years, they will receive 21 days of their basic salary for the first five years and 30 days of basic pay for the sixth year. The new law ensures that workers are entitled to 30 days of gratuity if they have more than five years of service.
How to calculate gratuity in UAE 2024
To calculate the gratuity entitlement under the new law in the UAE for 2024, three factors must be considered: the length of employment, the type of contract, and the last basic salary. The last basic salary will be used in the calculation, and it is important to know whether the contract is limited or unlimited, as there will only be a limited contract in 2024.
Example of Calculation:
To illustrate how the gratuity entitlement is calculated, let’s consider an example of an employee with a base pay of AED 5,000:
- Calculate the daily salary: AED 5,000 x 30 = AED 166.66. The daily salary is AED 166.66.
- Calculate the gratuity entitlement for one year of service: AED 166.66 x 21 = AED 3,500. For every year of service, the employee is entitled to 21 days’ pay, which is equal to AED 3,500.
- Calculate the gratuity entitlement for up to five years of service: Multiply the gratuity entitlement for one year of service (AED 3,500) by the number of years of service. For example, if the employee has worked for three years, the gratuity entitlement would be AED 3,500 x 3 = AED 10,500.
- Calculate the gratuity entitlement for more than five years of service: For those who have served longer than five years, the calculation is based on 30 days’ pay. Multiply the daily salary (AED 166.66) by 30 to get AED 5,000. For each year of service, the employee is entitled to 30 days’ salary, up to a maximum of two years’ salary, in the form of a gratuity payment of AED 5,000.
By following these steps, employees can calculate their gratuity entitlement under the new law in the UAE for 2024. It is important to note that gratuity is calculated based on working days, and unpaid leave days are excluded.
What are the Requirements for Receiving a Gratuity?
To be eligible for a gratuity payment, an employee must meet certain requirements. Firstly, the employee must have worked for the company for at least one year. Secondly, the employee must have retired from service. Thirdly, the employee must have tendered their resignation after five years of continuous employment with the company. Finally, in the event of the employee’s death, the gratuity payment will be made to the nominee. If the employee becomes disabled due to illness or an accident, the payment will be made to the employee.
What to Do If an Employer Refuses to Pay Gratuity
Under the new gratuity law in the UAE for 2024, employers are required to pay their employees’ end-of-service benefits within 14 days of their employment ending. However, some employers may refuse to pay gratuity or may try to reduce the amount based on the employee’s contract type or date of resignation. In such cases, employees can take the following steps:
- Contact the Ministry of Human Resources and Emiratisation (MOHRE) to file a complaint.
- Provide all necessary documents and evidence to support their claim.
- Attend a conciliation meeting with the employer and MOHRE.
- If the issue is not resolved, employees can escalate the case to the labour court.
It is important for employees to know their rights and take action if their employer refuses to pay gratuity. The new gratuity law aims to protect employees and ensure they receive their entitlements upon termination of their employment.
Employee Rights and Benefits
As an employee in the UAE, you have certain rights and benefits that are protected by law. The new gratuity law, effective from 2024, ensures that you are entitled to fair compensation and treatment from your employer.
Claims Process
If you believe that your employer has not fulfilled their obligation to pay your gratuity, you can file a claim with the Ministry of Human Resources and Emiratisation. The claims process is straightforward and designed to protect your rights as an employee.
To file a claim, you must provide relevant documentation, including your employment contract, salary details, and any other relevant information. The ministry will review your claim and make a determination based on the evidence provided.
Dispute Resolution
If you and your employer are unable to reach an agreement on gratuity payment, you can seek the assistance of the Ministry of Human Resources and Emiratisation. They will provide mediation services to help you resolve the dispute and reach a fair settlement.
If mediation is unsuccessful, the ministry may refer the matter to the courts for a final decision. However, this is considered a last resort and should only be pursued if all other avenues have been exhausted.
Overall, the new gratuity law ensures that you are protected as an employee in the UAE. With a clear claims process and dispute resolution mechanism in place, you can be confident that your rights and benefits will be upheld.
Transition from Old to New Law
Comparative Analysis
The new gratuity law in UAE 2024 replaces the previous law that has been in place since 1980. The new law aims to provide better protection for employees and ensure that they receive fair gratuity payments. The new law introduces a number of changes, including the calculation of gratuity based on the employee’s total salary, rather than their basic salary.
Under the old law, gratuity was calculated based on the employee’s basic salary, which meant that many employees were not receiving fair payments. The new law aims to address this issue by ensuring that gratuity is calculated based on the employee’s total salary, including any allowances or bonuses.
Implementation Timeline
The new gratuity law in UAE 2024 will come into effect on 1st January 2024. Employers will need to ensure that they are compliant with the new law by this date. The implementation of the new law is expected to be smooth, as it has been well-publicised and employers have had time to prepare.
Employers will need to update their employment contracts to reflect the new law, and ensure that they are calculating gratuity payments correctly. They will also need to communicate the changes to their employees and provide them with information on how their gratuity payments will be calculated under the new law.
In conclusion, the transition from the old to the new gratuity law in UAE 2024 is expected to be smooth, with employers having had time to prepare for the changes. The new law aims to provide better protection for employees and ensure that they receive fair gratuity payments.
