# Dubai Free Zone employment law question.



## gurromat (May 12, 2010)

Any experts out there know the answer to these conundrums?

Question for anyone who knows the labour law and Dubai Free Zones:

If a limited term contract is terminated by the employer and there is outstanding leave:
1. Is the payment for outstanding leave calculated including or excluding allowances (housing, transport etc.).
2. For what period is the payment due? The entire duration of employment or only for the last X years?

If a limited term contract is terminated by the employer without a valid cause, what compensation is due to the employee?

Thanks,

Gurromat.


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## Budw (Oct 14, 2013)

gurromat said:


> Any experts out there know the answer to these conundrums?
> 
> Question for anyone who knows the labour law and Dubai Free Zones:
> 
> ...





1. Excluding allowances. Leave and allowances are not related to each other. Leave payment is based on your basic salary. Allowances are a benefit.
2. Total unused leave accumulated until date of termination


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## gurromat (May 12, 2010)

Budw said:


> 1. Excluding allowances. Leave and allowances are not related to each other. Leave payment is based on your basic salary. Allowances are a benefit.
> 2. Total unused leave accumulated until date of termination


Thanks Budw, is there a statement anywhere in the labour law to this effect (or in Free Zone regulations?)


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## gurromat (May 12, 2010)

Budw said:


> 1. Excluding allowances. Leave and allowances are not related to each other. Leave payment is based on your basic salary. Allowances are a benefit.
> 2. Total unused leave accumulated until date of termination


Budw, you are contradicted by the text here:
http://www.iicuae.com/externals/altamimi/Labour Law.pdf

Is the employee entitled to payment in lieu of leave if his services are terminated?
The employee is entitled to payment of his wages for the annual leave period not taken if his employment is terminated, or he resigns after serving the period of notice determined by law. Such payment is calculated on the basic wage received at the time the leave was due including any housing or accommodation allowance where applicable. Some employers also include transportation allowance in the calculation, although this is discretionary rather than compulsory.
Nevertheless, according to judgments delivered on the matter, an employee may only claim remuneration for the annual leave not taken for the last two years of employment at the rate of the wages paid during that time. Any leave days not taken prior to that period are therefore time barred and the employee is precluded from claiming remuneration against them (providing the employer relies on this time bar provision in the event of a claim).


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## saraswat (Apr 28, 2012)

It is best to get in touch with the relevant freezone and ask them, I am sure they will be able to give you the info. The only thing I can tell you is that for leave wages, in both freezones and mainland, the calculation is based on basic+accomodation allowance. 

The end of service payment is the one calculated on the basis of just your basic component. Finally, the most prudent thing to do is to get in touch with the freezone authority.


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## Jumeirah Jim (Jan 24, 2011)

what Sarawat said. 

There's no such thing as "Dubai Free Zone". They will all be slightly different and DIFC more different than most. You need to approach the question on a free zone by free zone basis.


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## Jager (May 26, 2012)

Jumeirah Jim said:


> what Sarawat said.
> 
> There's no such thing as "Dubai Free Zone". They will all be slightly different and DIFC more different than most. You need to approach the question on a free zone by free zone basis.


Agree, it may vary Free Zone by Freezone so its best to discuss with the relevant authority. I believe most have dispute resolution teams who will assist employers and employees worth through their issues. However, for what its worth, I recently attended a seminar hosted by the DMCC and they indicated payments are only calculated on the base salary (ie housing and other allowances are excluded).


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## gurromat (May 12, 2010)

Jager said:


> Agree, it may vary Free Zone by Freezone so its best to discuss with the relevant authority. I believe most have dispute resolution teams who will assist employers and employees worth through their issues. However, for what its worth, I recently attended a seminar hosted by the DMCC and they indicated payments are only calculated on the base salary (ie housing and other allowances are excluded).


I spoke to the Freezone authority (TECOM) who stated that the only law applicable is the UAE labour law and they do not give any legal advice.


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## Jumeirah Jim (Jan 24, 2011)

TECOM is one free zone authority but there are many more. They each follow different, though often similar, lines...

DMCC's line on excluding gratuities or for those who still "get" them accommodation allowances/ education allowances /transport allowances when calculating gratuity payments is absolutely standard. 

I often lol on here when newbies brag about their seemingly endless "allowances" rather than the basic salary in their labour contract (on which the gratuity will be calculated). Little do they know......


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## gurromat (May 12, 2010)

Jumeirah Jim said:


> TECOM is one free zone authority but there are many more. They each follow different, though often similar, lines...
> 
> DMCC's line on excluding gratuities or for those who still "get" them accommodation allowances/ education allowances /transport allowances when calculating gratuity payments is absolutely standard.
> 
> I often lol on here when newbies brag about their seemingly endless "allowances" rather than the basic salary in their labour contract (on which the gratuity will be calculated). Little do they know......


Hi JJ,

My question does not concern the end of service gratuity which as you rightly point out is based on the base salary portion only.

G.


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## saraswat (Apr 28, 2012)

gurromat said:


> I spoke to the Freezone authority (TECOM) who stated that the only law applicable is the UAE labour law and they do not give any legal advice.


If the law they implement is the UAE labor law then these would be the facts:

1. Leave salary payment: Basic + Housing allowance. For the time that is accrued since your last leave taken. 

2. End of Service payment: Basic only. For the entirety of your employment. But, the calculation is different depending on the amount of time spent in employment, and also different in cases of termination or resignation. Since yours is a termination, what would apply is as follows:

6 months (as this is usually the maximum amount of probation period) -5 year/s of completed employment: 21 days per annum (basic component of your wages)

5+ years of completed employment: 21 days per annum until 5 years and then 30 days for the period forthwith. (again basic component of your wages)

3. Limited Contract termination: Because yours is a limited contract *and* you were terminated by your employer, the entitlement comes out to 3 months of total wages. This is non-negotiable, it is the law. 

Finally, get in touch with the MOL, they will confirm the above:

Ministry of Labour


p.s: I know this information as part of my job (not an HR professional but I audit the HR department...)


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## gurromat (May 12, 2010)

Thanks saraswat, that's very helpful. I expect I will have to go to a judge to get a ruling on this so will post back when I have a final adjudication.


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