Companies are not obliged to factor housing, education and transport allowances into the gratuity due to UAE employees when they leave a job, a leading lawyer has told 7DAYS, dashing hopes a new legal ruling would mean bigger pay-offs.
However, employers are obliged to take into account commission, contractual bonuses and other similar benefits when assessing what to put aside for when a worker leaves their employment, said Neil Crossley, a UAE-based partner of international legal firm DLA Piper.
He revealed his firm’s Dubai office was inundated with calls yesterday after Dubai’s Court of Cassation ruled in favour of an employee fighting his former firm for commission payments he said should be included in his end of service gratuity.
Reports that the court had ruled gratuities should be calculated upon “the entire amount received by a worker” raised hopes among some yesterday, including Twitter users, that farewell handshakes were about to get that bit more golden - leaving businesses with a major headache as a result.
However, Crossley told 7DAYS that Article 134 of the UAE’s labour law is “quite simple” and exempts firms from having to include certain allowances in gratuities paid to departing employees.
“What 134 says specifically is that it should not include any amounts referable to what we call the allowances - so the housing allowance, education allowance, travel allowance - all those other bits and pieces that people get,” he explained.
But there is good news for those on modest salaries who depend on commission for a substantial portion of their income, such as sales staff – the Dubai court’s ruling underlines the principle that companies should look at the average commission paid to them before they left the company and factor this into their pay-off.
Crossley said it was important that people understood the law to avoid firms being “panicked” they will be hit by bigger claims , or workers feeling aggrieved about payments they were never due.
