Know the law: How much severance pay in UAE if fired?

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Severance pay does not come in big packages in the UAE. There is a limit to what an employee will get unless big amounts/benefits are mentioned in the contract agreed upon by the two parties.

According to Hasnain Qazi, Middle East Business Manager at Huxley Associates, this is “usually limited to senior executive roles in multi-nationals.”

Agrees Caroline Gentles, Senior Consultant at Cobalt HR Consultancy. “This [severance pay] is not common in the UAE as it is not a legal requirement. It is, however, legally required that all companies pay an employee their end of service gratuity, which varies in value based on the number of years’ service to the company,said.

However, this does not mean that severance pay is non-existent in the country. There are employees who are entitled to big payouts in this form but it comes with its clauses.

An HR manager in a multinational bank in Dubai says there is no common policy of the organization and it all depends on the contract that the employee has signed with the institution.

“There are people who will be entitled to what is just required by the law but then there are also employees who will get generous severance pay, which has been mentioned in their contract letter. If an employee comes with a certain expertise that is difficult to find in the market, then s/he can have more clauses added. There are professionals who come on a two-year contract and if they are terminated, they will get the full salary for all the remaining months. The average Joe, on the other hand, gets what is just considered average in the market,” he told this website on the condition of anonymity.

Recruitment experts believe that, regardless of whether or not it is stated in the contract, good companies will always give additional benefits to their employees if they are giving them the boot.

“Most professionally run companies have a severance policy,” as Ash Athawale, a recruitment expert says. “This includes some amount of compensation, a month at the very least, encashment option of unused vacation days, return flight tickets to the individual’s home country and writing off any payments owed by the employee for education or training purposes. A majority of the companies will also allow the employees to keep the visa active until they can find suitable employment elsewhere in the UAE,” he told this website.

According to the country’s labour law, on the termination of the employment contract, an employee is entitled to a notice period, or any amount due in lieu of the notice period in the case of an unlimited contract.

In the case of an unlimited contract, compensation for unreasonable dismissal is to be given if the contract was terminated by the employer for unreasonable cause.

In the case of a limited contract, compensation equivalent to the period until the end of the contract, or three month’s wages, whichever is shorter is given. Payments equivalent to the balance of unutilised leave or any part thereof is also to be given to employees.

Payments for overtime or any balance of wages due and not yet paid, end of service gratuity calculated on the duration of the employment and repatriation expenses is also provided by the law.

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