Article no. 132 of the Federal
No. 8 of 1980 states the following: A worker who has completed a
period of one or more years of continuous service shall be entitled to
severance pay on the termination of his employment. The days of
absence from work without pay shall not be included in calculating the
period of service. The severance pay is calculated as follows:
1. Twenty-one days' remuneration for each year of the first five years
2. Thirty days remuneration for each additional year of service
provided that the aggregate amounts of service pay shall not exceed
two year's remuneration.
Return Ticket: entitled if he/she is not changing visa inside the UAE.
Q: I recruited a Nepalese as a cleaner on a contract of
unlimited duration. I spent Dh4,500 in November 2017 to get him a
two-wheeler driving licence. The employee now wants to resign from
employment and join another company. Can I recover the driving licence
A: It is assumed that you gave a loan to your employee for the
purpose of obtaining a driving licence and such a loan is documented
between you and your employee. If such is the case, you may recover
this money back from your employee. This is in accordance with Article
135 of the Federal Law No. 8 of 1980 regulating Employment Relations
in the UAE. It states, "An employer may deduct any amounts owed to him
by an employee from the latter's severance pay."
Know the law
An employer may recover a documented loan back from the employee.
Amount owed to the employee can be deducted from his severance pay.
---------------------------------------------------------------------------------------------- Below is the original text of the UAE Federal Labour Law with the
section on gratuity payments. Articles 132, 137, and 138 refer
specifically to the calculation of gratuity.
Federal Law No 8, For 1980, On Regulation of Labour Relations
Termination and Severance Pay
A worker who has completed one or more years of continuous service
shall be entitled to severance pay at the end of his employment. The
days of absence from work without pay shall not be included in
calculating the period of service. The severance pay shall be
calculated as follows:
21 days' wage for each of the first five years of service.
30 days' wage for each additional year of service provided always that
the aggregate amount of severance pay should not exceed two year's
A worker shall be entitled to severance pay for any fraction of a year
he actually served, provided that he has completed one year of
Without prejudice to the provisions of laws that grant pensions or
retirement benefits to employees in certain firms, severance pay shall
be calculated on the basis of the wage last due for monthly, weekly
and daily paid workers, and on the basis of the average daily wage
referred to in Article 57 hereof for those paid on piecemeal. The wage
used as a basis for calculating severance pay shall not include
whatever is given to the worker in kind, housing allowance, transport
allowance, travel allowance, overtime pay, representation allowance,
cashier's allowances, children education allowance, allowances for
recreational and social facilities, and any other bonuses or
An employer may deduct any amounts owed to him by a worker from the
latter's severance pay.
For the purposes of Article 132, no severance pay shall accrue for the
employment cases that preceded the enforcement of this Law except
where the worker is a National. This, however, shall be without
prejudice to any rights acquired by the worker under the repealed
labour laws, the employment contract, or under any agreement,
regulations or work rules of the firm. In the event of the worker's
death, his severance pay shall be paid to his legal heirs.
Where a worker under an indefinite term contract abandons his work at
his own initiative after a continuous service of not less than one
year and not more than three years, he shall be entitled to one-third
of the severance pay provided for in the preceding article. Such a
worker shall be entitled to two thirds of the said severance pay if
his continuous service exceeds three years up to five years, and to
the full severance pay if it exceeds five years.
Where a worker under a definite term contract abandons his employment
at his own initiative before the expiry of his contract period, he
shall not be entitled to severance pay unless his continuous period of
service exceeds five years.
A worker shall forfeit entitlement to his entire severance pay in any
of the following two cases:
If he is dismissed from service for any of the reasons specified in
Article 120 hereof or if he abandons his employment in order to avoid
being dismissed in accordance with that Article.
If he abandons his employment of his own accord, otherwise than in
either of the two cases specified in Article 121 hereof, without
notice (in the case of indefinite term contracts) or before completing
five years of continuous service (in case of definite term contracts).
Where a firm has a provident fund for the workers and the rules of the
fund stipulate that whatever the employer pays into the fund for the
worker's account is in discharge of his legal obligation in respect of
severance pay, the worker shall be paid the savings balance in his
account or the severance pay due under the Law, whichever is the
greater. Where the rules of the fund do not stipulate that the amounts
paid by the employer are in discharge of his legal obligation toward
the severance pay, the worker shall receive whatever is due to him in
the provident fund in addition to the statutory severance pay.
Where a firm has a retirement, insurance or a similar scheme, a worker
who is entitled to a retirement pension may opt for treatment under
the said pension or severance pay or under the pension or insurance
scheme, whichever is more advantageous to him.
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United Arab Emirates
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