Question: I work for a company in Dubai and earn a reasonable salary. A newly established company offered me a job that would require me to manage that company. I am very keen to accept the job offer, but I want to know what my rights will be if the company suddenly closes. Can I also request that a clause stating the severance pay amount be added to the contract in case the company is closed?

Reply: A foreign employee who completes at least one year of continuous service in the UAE is entitled to end-of-service benefits at the end of his service.

The amount of these benefits is calculated based on the employee’s basic salary. This is in accordance with Article 51(2) of the Federal Decree Law. Law No. 33 of 2021 on the Labor Relations Regulation and its amendments, which provides for end-of-service benefits.

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“A full-time foreign employee who completes one year or more in continuous service is entitled to severance pay rights at the end of his service, calculated according to the following basic salary:

A. (21) Twenty-one days’ pay for each year of the first five years of service.

B. (30) thirty days’ salary for each year exceeding this period.

In addition, Article 8 of the Labor Code, when read together with Article 10 (1) of the Council of Ministers Decree No. 1 of 2022 on the Implementation of Federal Decree No. 33 of 2021 on the Regulation of Employment Relations, specifies the general terms and conditions for the Regulation of Employment Relations. It can be included in the employment contract between the employer and the employee.

An employer can be penalized if it closes its business without paying its employees their rights, including severance pay rights. This is within the scope of Article 60 (1)(d) of the Federal Decree Law. (9) / Amending some provisions of Federal Decree No. 2024. (33) OF 2021 On Labor Relations states: “1. Individuals who commit the following violations will be fined a minimum of Dh100,000 and a maximum of Dh1,000,000.

– (D). Closing or suspending a workplace without following proper procedures for payment of workers’ dues is a violation of this law, the Implementing Regulation and the Decisions issued for its implementation.”

In accordance with the above-mentioned statutory provisions, you should be entitled to end-of-service benefits only after completion of one year of continuous employment.

In addition, the relationship between the employer and the employee is subject to the employment contract, the provisions of the Labor Law, the Council of Ministers Decision No. 1 dated 2022 and the subsequent amendments and ministerial decisions. Therefore, your severance pay and other employment rights are protected under the provisions of the Labor Law and subsequent ministerial decisions, and it is not mandatory to specify them in your employment contract.

However, for your convenience, you can mutually agree with your employer to include an appropriate clause regarding your end-of-service benefits in the employment contract.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is eligible to practice law in Dubai, the United Kingdom and India. Full details of his company: www.amalawyers.com. Readers can email their questions to [email protected] or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

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Ashish Mehta

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is eligible to practice law in Dubai, the United Kingdom and India. Full details of his company: www.amalawyers.com. Readers can email their questions to [email protected] or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.