Khaleej Times, Sunday, Nov 20, 2022 | Rabi Al Thani 25, 1444
UAE jobs: Can bonuses be included in employment contracts?
Emairtes:
Question: I
am considering taking up a job in the UAE. Are bonuses common in the country?
What about gratuity? Can I get these aspects added to my employment contract?
Response: Pursuant
to your queries, it is assumed that you have received a full-time employment
offer from an entity based in the mainland of UAE. Therefore, the provisions of
Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations (the
‘Employment Law’) and those of Cabinet Resolution No. 1 of 2022 on the
Implementation of Federal Decree Law No. 33 of 2021 Regarding the Regulation of
Employment Relations (the 'Cabinet Resolution No. 1 of 2022') are applicable.
An employer, at its discretion, may award bonuses to its employees. The
Employment Law is silent on mandatory bonus payments. However, an employer may
include bonuses as one of the benefits in the salary payable to an employee in
the employment contract. It can also be specified separately.
Payment of bonuses becomes mandatory if the same is mentioned in the employment
contract. Therefore, you may request your employer to include it.
Article 14(4) of Cabinet Resolution No. 1 of 2022 mentions that any employer in
the UAE which employs more than 50 employees needs to have regulations related
to promotions and rewards. However, the said provision of law is not clear
whether the term ‘rewards’ can be specifically interpreted as bonus or any other
rewards.
An employer may grant its employees with facilities and/or monetary benefits
which are more beneficial to the latter even though the same is not mentioned in
the Employment Law. This is in accordance with Article 65 (3) and (4) of the
Employment Law, which states: “3. Any condition which is contrary to the
provisions of this Decree-Law, even if preceded its entry into force, shall be
null and void, unless it is more beneficial to the employee. Any release,
conciliation or waiver of any rights of the employee hereunder shall be null and
void to the extent that it conflicts with its provisions.
4. The employer may establish and put in place organisational bylaws and
programmes in the Establishment that would be more beneficial to the employee
than those prescribed in this Decree-Law and its Executive Regulations. In the
event of conflict between such programmes and bylaws and the provisions of this
Decree-Law, conditions that are more beneficial to the employee shall apply."
The Employment Law includes provisions of severance pay (gratuity) payable to an
employee if he/she completes one year of continuous service. This is in
accordance with Article 51(2) of the Employment Law, which states: "A foreign
full-time employee who completes one or more years in the continuous service is
entitled to a severance pay, which is calculated on the basis of the basic
salary as follows:
a. 21 working days of salary for each of the first five years of service.
b. 30 working days of salary for each subsequent year of service.”
Usually, the MOHRE format of the employment contract may not include the clauses
related to severance pay. However, it includes the general clause related to
applicability of the provisions of Employment Law. Therefore, on this basis, you
are entitled to severance pay (gratuity) provided you have completed more than
one year of continuous service with your employer.