Top 9 Legal Reasons Employers Can Deny Your End-of-Service Gratuity Payment in the UAE
End-of-service gratuity in the UAE is a legal right for most private sector employees, based on contract type, service length, and termination reason. Employers may withhold gratuity for early resignation, misconduct, or contract breaches. If denied, employees can file complaints with MOHRE or Labor Court, which can enforce payment through legal means. This article explains when gratuity can be withheld and how to claim your rightful benefits.
Deny Your End-of-Service Gratuity: 9 Legal Aspects and Rules
Sometimes, despite completing years of service, employees face the frustrating situation where their employer withholds the end-of-service gratuity. While this can feel unfair, there are specific legal grounds under the UAE Labour Law that justify when an employer may lawfully deny gratuity payments. Understanding these can help you know where you stand and how to protect your rights.
Here are nine important legal reasons why your gratuity payment might be withheld:
Less Than One Year of Service
If you haven’t completed a full year of continuous employment with your current employer, you are generally not eligible for gratuity. This is a fundamental requirement under the law.
Leaving a Fixed-Term Contract Early
According to Article 138 of the UAE Labour Law, if you’re employed on a fixed-term contract and you leave before completing five years, you won’t be entitled to any gratuity benefits. So, quitting too soon can unfortunately mean losing out on this financial entitlement.
Resignation Without Proper Notice
For those on unlimited or open-ended contracts, Article 139(b) makes it clear that if you resign without giving the required notice period, your employer may legally withhold your gratuity. Always check your contract’s notice requirements to avoid this.
Providing False Information
If an employee is found to have submitted false documents, such as fake certificates or incorrect nationality information (a violation of Article 44), the employer has the right to dismiss the employee and deny gratuity, possibly taking further legal action.
Misconduct or Breach of Company Policies
Employers can also refuse gratuity if they can prove to the Labor Department that an employee has violated company rules, engaged in illegal activities, caused harassment, or damaged company property.
Criminal Convictions Affecting Honesty or Ethics
If an employee is convicted by a court of crimes related to dishonesty, fraud, or leaking confidential company information as specified under Article 40, the gratuity payment may be lawfully withheld.
Unauthorized Absences
Article 120 allows employers to terminate employees without notice — and deny gratuity — if they are absent for more than seven consecutive days or 20 intermittent days within a year without a valid reason.
Working Elsewhere During Leave
Per Article 88, working for another employer while on your annual or sick leave is prohibited. If caught, the employer can terminate your contract and legally deny your end-of-service benefits.
Lack of Awareness of Legal Rights
Sometimes employees unknowingly lose out simply because they aren’t fully aware of their gratuity rights or the legal requirements. Using an online gratuity calculator can help you estimate what you should receive based on your contract type, service duration, and reason for leaving.
What should You do if an Employer Denies Gratuity Payment?
If your employer refuses to pay your end-of-service gratuity despite meeting eligibility. You should file a complaint with the UAE Labor Office or Ministry of Human Resources and Emiratisation (MOHRE). The Labor Court will then review your case and can order the employer to pay if you are entitled. Before taking legal action, ensure you haven’t violated any terms such as providing false documents & unauthorized absences. As these can affect your claim.
Preparing a formal gratuity claim letter citing relevant UAE Labour Law articles can strengthen your case. Consulting a labour lawyer can also help clarify your rights and guide you through the process. Acting promptly is important to avoid delays in receiving your dues. Use official grievance channels to ensure your complaint is properly logged.
What to do if a UAE Company Claims Non-availability of Gratuity Funds?
Under the UAE New Labour Law, employers must pay gratuity after one year of service, regardless of their financial situation. If an employer claims insufficient funds to pay your gratuity or unpaid salary. immediately file a complaint with MOHRE or the Labor Court.
These authorities can investigate and legally enforce payment if the court rules in your favor. Employers cannot withhold gratuity simply because of cash flow problems. Legal action through official channels is your right and often results in prompt resolution. Keep records of your employment and contract to support your claim. Don’t hesitate to use online gratuity calculators to estimate your entitlement before filing a complaint.
When Is Gratuity Not Payable In The UAE?
If the employer ignores a court order to pay your gratuity. The execution court can seize the company’s assets, including movable and immovable property, to cover the payment. According to ‘Article 4’ of the Employment Law, these payments must be cleared immediately once the employer defaults, ensuring you receive what is owed. Asset seizure is a legal enforcement step designed to protect employees’ financial rights.
You can request the court to initiate this process if payments remain outstanding after judgment. This legal recourse ensures employers cannot indefinitely avoid gratuity payments after a court ruling. Consult your lawyer or MOHRE for assistance in enforcing the court’s decision.
Procedures For Obtaining The End Of Service Benefits Under UAE Labour Law:
- Complete your employment contract or termination process according to the terms agreed with your employer.
- Ensure you have fulfilled the minimum service period of one year to be eligible for gratuity.
- Request a formal calculation of your end-of-service gratuity from your employer or HR department.
- Prepare necessary documents, such as your employment contract, salary slips, and any related correspondence.
- If the employer delays or denies payment, file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE) or the UAE Labor Office.
- MOHRE will review the complaint and may initiate mediation or legal proceedings through the Labor Court if necessary.
- Attend any hearings or provide requested evidence to support your claim during the labor dispute resolution process.
- Once the Labor Court issues a judgment in your favor, the employer is legally obligated to pay the gratuity and other dues.
- If the employer still refuses payment, enforcement mechanisms like asset seizure can be initiated under Article 4 of the Employment Law.
Most Common Query
Does the UAE Labour Law’s provision on end of service gratuity apply to all private workers?
The UAE Labour Law’s end of service gratuity mainly applies to private sector workers in the mainland and most freezones. However, different rules govern employees based on their location and employer, such as DIFC Employment Law for DIFC employees, ADGM regulations for ADGM workers, and specific freezone laws like JAFZA Rules. Domestic workers also have separate protections under Federal Law No. (10) of 2017. So, while most private workers are covered, the exact gratuity rules can vary depending on jurisdiction and contract type.
So if I’m employed in the private sector and work for more than a year, do I definitely get some sort of end of service gratuity?
Not necessarily. While completing at least one year generally makes you eligible, the type of employment contract matters. For example, under Article 138, employees on fixed-term contracts who resign before completing five years may not be entitled to gratuity. Also, if you resign without giving proper notice as per Article 139(b), your gratuity can be withheld. So, eligibility depends on contract type, duration, and how your employment ends.
So what if I quit my fixed term contract early, do I really owe my employer money?
Yes, usually you owe compensation if you terminate a fixed-term contract early. Article 116 of the UAE Labour Law states that the employee must compensate the employer for losses caused by early termination, typically capped at a month and a half’s wages for up to three months or the remaining contract period. Ministry of Labour Decree 765/2015 allows compensation up to three months’ gross wages if agreed upon. It’s important to check your specific contract terms and seek legal advice if unsure.
So what if I am due an end of service gratuity payment and I don’t resign, how else can the employer not pay me then?
Even if you haven’t resigned, employers can deny gratuity if you’re dismissed for valid legal reasons, such as misconduct, breach of contract, unauthorized absence, or criminal conviction as outlined in Articles 40, 44, 120, and 139(a). Violations like false identity, failure to perform duties, or working under the influence during work hours can forfeit your gratuity rights. So, employer non-payment can be lawful if these conditions apply.
What about if I am caught working for another company during my annual leave, will I lose my gratuity if sacked for that?
According to Article 88 of the UAE Labour Law, working for another employer during annual or sick leave is prohibited. If proven, your employer can terminate your contract without notice and withhold wages for the leave period. However, whether this leads to loss of your end-of-service gratuity depends on jurisdiction and contract specifics. MOHRE legal advisors suggest gratuity may still be payable in some cases, but certain freezones like JAFZA explicitly forfeit gratuity for this reason.
Conclusion
Understanding your rights under the UAE Labour Law is essential to ensure you receive your rightful end-of-service gratuity. While employers have legal grounds to withhold payment in specific cases, most employees who meet eligibility criteria are entitled to full benefits. If your gratuity is unfairly denied, using official complaint channels like MOHRE and the Labor Court can help resolve disputes. Legal enforcement mechanisms, including asset seizure, protect your entitlement even after court rulings. Stay informed and proactive to safeguard your financial rights when leaving your job in the UAE.