# Gratuity calculation, where employer initiate contract termination



## sgt_sid (May 7, 2015)

Hey guys!

I am new here and I need your expert opinion...

Here's the situation: There's around 50 of us who are working as sub-contracted employee of an MNC, i.e. our visa and contract (unlimited) is under a manpower agency. Now, the MNC decided to shift us to another manpower agency (reason is irrelevant to my query so I won't get into that). So apparently our visa/contract with the current Agency will be terminated. Effective date of the termination is 3 months from now. By that time I've rendered 2 years and 8 months of service. Visa is PRE-terminated by 16 months since it's renewable every 2 years.

Okay now on the gratuity calculation.. what I understand is that since the termination of the contract is initiated by the employer, we are entitled to the FULL gratuity of 21 days for every year of service, pro-rata.... right?

Or can the Agency pass it out as resignation (hence initiated by the employee), which will then entitle them (as per Labor Law) to reduce the gratuity by 2/3 or 14 days for every year of service, noting that my service is less than 3 years? I am thinking of this because we were told that they will process the visa cancellation in batches... will the Ministry of Labor have any tracking on this?

Or is my understanding of "End of Service Gratuity" computation correct, in the first place? If not, can you kindly help me understand it better..

Thank you so much for the opinion on this! If any further details is needed, I will provide..


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## rsinner (Feb 3, 2009)

your understanding is correct partially. If the company terminates, they have to pay the full amount.

If you "resign", the company only has to pay you ONE third (not 2/3) since the period of service is less than 3 years. 

you can look up the labour law online (it is on a couple of UAE govt. websites)


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## DavidAldis (Apr 30, 2009)

But, as in all things here, the law is not always what counts!


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## Gavtek (Aug 23, 2009)

You should be entitled to the full amount. The manpower agency will (presumably) be charging the MNC an all-inclusive rate that includes things like vacation pay, gratuity, etc. If the manpower agency is being run properly, they will have sufficient accruals in their accounts for employee gratuity that they increase every month.


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## sgt_sid (May 7, 2015)

rsinner said:


> your understanding is correct partially. If the company terminates, they have to pay the full amount.
> 
> If you "resign", the company only has to pay you ONE third (not 2/3) since the period of service is less than 3 years.
> 
> you can look up the labour law online (it is on a couple of UAE govt. websites)


thanks for the confirmation, rsinner!
On your 2nd statement, I think you have misread it.. what I said is they will reduce 2/3 to the gratuity, if they trick us by filing it as resignation and not termination by their end. hence we'd be left with 1/3, so we mean the same.  thanks again cheers


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## sgt_sid (May 7, 2015)

DavidAldis said:


> But, as in all things here, the law is not always what counts!


what do you mean? do you have any actual experience regarding the same? if so, can you kindly share.. thank you!


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## sgt_sid (May 7, 2015)

Gavtek said:


> You should be entitled to the full amount. The manpower agency will (presumably) be charging the MNC an all-inclusive rate that includes things like vacation pay, gratuity, etc. If the manpower agency is being run properly, they will have sufficient accruals in their accounts for employee gratuity that they increase every month.


thanks gavtek. what i am afraid of is that they'll trick us by filing the cancellation (to MOL) like as if we resign or something (if that's possible). would you know of any circumstance that will 'legally' allow them to give us only 7 days of gratuity (not 21)?


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## Gavtek (Aug 23, 2009)

They can only pay you the 7 days if you resign. If they terminate your contract, they have to pay the 21 days. They could of course refuse to terminate your contract until you resign, but then they'd be obliged to continue paying your salary. If there is a few of you, you should get together and get the MNC to put pressure on them to play ball, after all, you will not be able to continue working for them if the agency does not terminate your contract with them.


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