# End of Service Entitlement



## Gavtek (Aug 23, 2009)

I've been through the Labour Law a few times, and I'm fairly familiar with the gratuity concept and calculation, however, there's one thing I'm not too sure about, I wonder if anyone on here has come across it?

Is the End of Service entitlement applicable if the employee is relocating away from the UAE but remaining with the same employer? Technically, the UAE employment contract is being terminated, but the individual's employment is not being terminated.


----------



## Elphaba (Jan 24, 2008)

Your service in the UAE will come to the end, as does the local contract, so your end of service gratuity is calculated at that time. 

Do let me know if anyone has any queries of this nature as I deal with these types of queries all the time... 
-


----------



## Lenochka (Apr 19, 2008)

Of course, as always, Elphaba is correct.

I've done exactly that...moved for the same company from Dubai to Singapore.....and got the full End of Service Gratuity...

Good luck with your move
L.


----------



## Gavtek (Aug 23, 2009)

It's not me doing the moving, rather trying to prevent my company incurring unnecessary expenditure. Unfortunately, I can't count on the law being sensible and reasonable on this matter.


----------



## Lenochka (Apr 19, 2008)

ok, misunderstood. however, answer stands....gratuity/end of service is due


----------



## pamela0810 (Apr 5, 2010)

Elphaba said:


> Your service in the UAE will come to the end, as does the local contract, so your end of service gratuity is calculated at that time.
> 
> Do let me know if anyone has any queries of this nature as I deal with these types of queries all the time...
> -


Elphaba, if you get paid your end of service gratuity doesn't that essentially mean that your service with the company has ended? 
So if I transfer to another location, wouldn't the new department then add me in as a new associate and the previous years of service wouldn't be counted as they have already been paid for?? :confused2:


----------



## Lenochka (Apr 19, 2008)

Pamela,
one is an internal matter - the other one an external, local rules and regulation matter. 
I've got now 16 years with the same company....in there 2 years Dubai (where the end of service gratuity was paid based on local rules and regs in UAE) and 
now Singapore where such things does not exist. however, still with the same company and pension fund, longevity awards etc interally still apply


----------



## pamela0810 (Apr 5, 2010)

Thanks Lenochka. I think I see Gavtek's point as the department that is losing the associate will need to bear the costs of the end of service when in fact it should be the new department that carries over these costs since the associate is not losing his years of service.


----------



## Elphaba (Jan 24, 2008)

pamela0810 said:


> Elphaba, if you get paid your end of service gratuity doesn't that essentially mean that your service with the company has ended?
> So if I transfer to another location, wouldn't the new department then add me in as a new associate and the previous years of service wouldn't be counted as they have already been paid for?? :confused2:


The end of service gratuity is a legal requirement in the UAE and does not relate to total service with the company if you move to another country. Your service in the UAE will have ended and thus payment is due. 
-


----------



## Lenochka (Apr 19, 2008)

if it's the same company it is basically left pocket/right pocket. The cost of this needs to be borne by the dept in the UAE and that should be factored in when hiring somedody....


----------



## cherbats (Mar 13, 2011)

*Gratuity for transfers*



Elphaba said:


> The end of service gratuity is a legal requirement in the UAE and does not relate to total service with the company if you move to another country. Your service in the UAE will have ended and thus payment is due.
> -


Hello Elphaba, 

I am transferring from Dubai to Canada (I remain employed with same company but have a new contract in Canada). They are insisting that because I'm not resigning or being terminated, I am not due gratuity. They are also insisting that they are legally compliant. 

Short of reporting them to the labour department what are the options open to me? Is there a legal document/ notice that I can show them to convince them that they're wrong? 

Thank you,
Cheryl


----------



## Gavtek (Aug 23, 2009)

I'm going through the same process from an employer's point of view. Despite it being incredibly unfair, you are entitled to it. If I was your employer, I'd just sack you for trying to claim it if I'm paying for the cost of your repatriation.


----------



## Global Citizen (Mar 1, 2011)

Gavtek said:


> I'm going through the same process from an employer's point of view. Despite it being incredibly unfair, you are entitled to it. If I was your employer, I'd just sack you for trying to claim it if I'm paying for the cost of your repatriation.


or... since you are an employer in a country that requires these payments, you would do the sensible thing and pay it. 

the question becomes how do companies then account for it? 

many just calculate these types of required payments before hiring someone and include them in their package by lowering monthly salary by an equal amount --- many employers do this all over the world... for these types of govt required payments. 

In Singapore, its done that way for the required 13th month payment, same in the phils and its the way my company calculates the housing, food, transport allowances required by the govt in lagos.


----------



## Gavtek (Aug 23, 2009)

Global Citizen said:


> or... since you are an employer in a country that requires these payments, you would do the sensible thing and pay it.


No.

As an employer, say I transfer a well paid ex-pat to the UAE, paying full cost of moving the employee, his family, his pets and all of his possessions to the country. 

While he is here, I pay him a generous tax-free salary, provide housing, car, all utility bills paid for and he rents his house back home and earns money on that. 

We transfer him back to his home country, paying the full cost of relocation for all the items mentioned above and continue employing him on a considerable salary.

He then comes to me and demands severance pay without actually leaving the employment of the company nor suffering any kind of financial inconvenience.

I'm 100% certain if I was running a company and someone did that, I would just dismiss them on the spot. They'd get the gratuity that they'd technically be legally entitled to and I wouldn't have to look at their greedy ungrateful face ever again.

The sensible thing is to not hire people like this in the first place.


----------



## cherbats (Mar 13, 2011)

Gavtek said:


> No.
> 
> As an employer, say I transfer a well paid ex-pat to the UAE, paying full cost of moving the employee, his family, his pets and all of his possessions to the country.
> 
> ...



Thats exactly the way my employers view this. To me its simple - firstly do the legal thing. Dont say you're legally compliant if you're just being cheap.

Secondly, another way to view gratuity is that it's a government mandated alternative to a pension plan - a payment meant to "compensate for the absence of a true pension scheme" 

thenational.ae/lifestyle/personal-finance/uae-weighs-changes-to-end-of-service-gratuity-policy

In other words, its a mandated benefit. Saying you're not paying a person who is transferring their gratuity would be like a company in Europe saying that they're going to withdraw pension contributions they made for the employee in the years theyve been in service in the country because theyve transferred out of it. You'd have mayhem if you tried to float that idea in Europe no matter how awesome the other benefits the company offered were. 

Also I really think its low tactic when people say that "oh you're getting all these benefits, so stop being "greedy"." Knowing your rights and insisting you get them is simply being well informed, not greedy.


----------



## Gavtek (Aug 23, 2009)

Well in my scenario you can add "continue to make pension contributions while still in the UAE".

I'm no legal expert, but in my opinion, this is a perfect example of something that goes against the spirit of the law.

If you have continued in the same employment and haven't suffered financially whatsoever (in fact, you've had your lifestyle 100% subsidised), I can see no justification for entitlement to severence pay. 

Not every employer is a cash-rich multi-national corporation.


----------



## cherbats (Mar 13, 2011)

Gavtek said:


> Well in my scenario you can add "continue to make pension contributions while still in the UAE".
> 
> I'm no legal expert, but in my opinion, this is a perfect example of something that goes against the spirit of the law.
> 
> ...



Gratuity is not tied to or meant to compensate for suffering financially (at least the part of gratuity that is linked to resignation rather than termination), but rather to compensate for absence of pension is the point that I was trying to make. 

It makes no sense to compensate an employee for "financial suffering" if they resign. If the whole point was to compensate for financial suffering we would only have gratuity upon termination (like most other countries do)

BTW, I may be wrong about this, but I read somewhere that if a company is paying into a pension plan that is equal to or greater than the required gratuity amount they dont need to pay the gratuity as long as they've made it clear that its one or the other upfront


----------



## Global Citizen (Mar 1, 2011)

Gavtek said:


> No.
> 
> As an employer, say I transfer a well paid ex-pat to the UAE, paying full cost of moving the employee, his family, his pets and all of his possessions to the country.
> 
> ...



I think you are missing the point. its a govt REQUIREMENT. it should be done regardless of what the employer or employee thinks is fair/deserving. it would be stupid for a company to violate the law and try to justify it by saying 'i paid his moving allowance.'

as i said, you should just lower the salary by x amount then repay x upon leaving the country... that keeps your company in compliance with the law and most employees would understand that. 

these types of laws have absolutely nothing to do with the moving allowances, employee renting out his home or anything else. 

and btw, just bc you think its 'tax free' doesnt mean it is... for example, all americans have to pay taxes on global income... so when i negotiated my package, i did not allow my employer to use that tax free nonsense to reduce my salary.


----------



## Gavtek (Aug 23, 2009)

cherbats said:


> Gratuity is not tied to or meant to compensate for suffering financially (at least the part of gratuity that is linked to resignation rather than termination), but rather to compensate for absence of pension is the point that I was trying to make.
> 
> It makes no sense to compensate an employee for "financial suffering" if they resign. If the whole point was to compensate for financial suffering we would only have gratuity upon termination (like most other countries do)
> 
> BTW, I may be wrong about this, but I read somewhere that if a company is paying into a pension plan that is equal to or greater than the required gratuity amount they dont need to pay the gratuity as long as they've made it clear that its one or the other upfront


The pension thing is the first time I've heard of it having anything to do with pensions, even after contracting 2 expensive lawyers to look into our case. I have always been under the impression that the objective of gratuity is to help tide people over until they get a new job.

If it was a pension, why would it be reduced by 2 thirds if you resign? If it's a pension benefit then everyone would get it in full regardless of how they depart the company.


----------



## Gavtek (Aug 23, 2009)

Global Citizen said:


> I think you are missing the point. its a govt REQUIREMENT. it should be done regardless of what the employer or employee thinks is fair/deserving. it would be stupid for a company to violate the law and try to justify it by saying 'i paid his moving allowance.'


It's a clear government requirement in cases of termination of employment or resignation. Transferring to another country while remaining on the same contract with the employer is not covered by the law.



Global Citizen said:


> these types of laws have absolutely nothing to do with the moving allowances, employee renting out his home or anything else.


Our lawyers have specifically told us that all the other benefits received would count in our favour should we have the stomach for a court case but ultimately the final decision will depend on the mood of the judge.



Global Citizen said:


> and btw, just bc you think its 'tax free' doesnt mean it is... for example, all americans have to pay taxes on global income... so when i negotiated my package, i did not allow my employer to use that tax free nonsense to reduce my salary.


I'm not talking about you, I am specifically referring to the scenario I described.

It's all very well claiming that the law must be followed regardless of the circumstances, I'm sure you'd be similarly understanding if the same law saw you behind bars if a bank cashed your loan cheque in error or something similarly ridiculous.


----------



## Lita_Rulez (Nov 4, 2010)

Gavtek said:


> No.
> 
> While he is here, [...] he rents his house back home and earns money on that.


That has nothing to do with the contract you may have with him, and in no way should it be an argument in discussing contractual/legal obligation AFTER THE FACT.





> As an employer, say I transfer a well paid ex-pat to the UAE, paying full cost of moving the employee, his family, his pets and all of his possessions to the country.
> 
> While he is here, I pay him a generous tax-free salary, provide housing, car, all utility bills paid for.
> 
> We transfer him back to his home country, paying the full cost of relocation for all the items mentioned above and continue employing him on a considerable salary.


You can extend the list by adding the number of forks and knives he has carried over if it makes you feel better, it will not change the simple fact of the matter : you made the deal because you wanted the guy to come over, and these were the conditions for him to come. If it had not been worth it to you, you would not have done it. None of it was done "out of the goodness of your heart", and no employee has held a gun to your head.




> He then comes to me and demands severance pay without actually leaving the employment of the company nor suffering any kind of financial inconvenience


And why would he need to suffer some kind of financial inconvenience to get his dues ? We are not talking torts here, we are talking basic, down to earth, entitlement. He did not sign his employment contract by himself, you signed it as well, and being the employer, knowing fully well what the obligations of each party to the contract would be.
And don't paint him to be a black sheep trying to squeeze every penny out of a nice employer. 
Why does he ask for severance pay ? Because he is entitled to it. And how would he be entitled to it ? 
The only reason he is due severance pay, is because he had a local contract. If you proposed him a local contract instead of an expatriation contract, it's because it was more profitable to the company. You get something out of it, so does the employee.




> I'm 100% certain if I was running a company and someone did that, I would just dismiss them on the spot. They'd get the gratuity that they'd technically be legally entitled to and I wouldn't have to look at their greedy ungrateful face ever again


Whatever floats your boat. As much as I despise employees who take unfair advantage of particular situations to renegotiate their contracts (well, I wanted to go back to my country, and you need me to stay for the end of this extended construction period, so I'll do it but only with a raise of 50% and an additional bonus) and would get rid of them the first chance I get after that, I have no sympathy whatsoever for employer who try to paint a warm and fuzzy glow over what was really a decision based on market conditions, and then try to weasel out of their obligation towards employees on the grounds that "they have been so nice up to now".


----------



## confusedHR (Aug 12, 2011)

*Legal documentation*



Elphaba said:


> The end of service gratuity is a legal requirement in the UAE and does not relate to total service with the company if you move to another country. Your service in the UAE will have ended and thus payment is due.
> -


Do you have the link to any official/ government website that states what you said, that payment is due if your service in the UAE has ended, even when you are still wth the same company and going to another country.


----------



## confusedHR (Aug 12, 2011)

cherbats said:


> Hello Elphaba,
> 
> I am transferring from Dubai to Canada (I remain employed with same company but have a new contract in Canada). They are insisting that because I'm not resigning or being terminated, I am not due gratuity. They are also insisting that they are legally compliant.
> 
> ...


Hey cheryl,

I am in a situation similar to yours and I was wondering if you were able to find any legal documents/ notice to show to your employer?


----------

