End of contract or resignation gratuity Dubai

[desertrose]

I have a friend who will complete her 3 years of service next month and would like to inform her company of her decision not to renew her visa as she is going back to her home country. How much she is entitled for? Is it 7 days per year or the 21 days since she already completed 3 years?

We've asked a lot of people and we were told that it depends on the company she is working for, what exactly is the rule with the 'finished contract' given that it is an unlimited one?

If you submit a letter of non-renewal of contract to your employer, at least a month before your visa expires, is it considered NOTICE of non-renewal or resignation?

I would really appreciate if you could shed some light on this matter as my friend and I are confused whether her company will consider her letter as resignation or as notice of termination of contract. Are we correct that if it is finished contract then she is entitled for 21 days x 3 years settlement, but if she resigned then she would only receive 7 days per year of service.

Thanks!

[shawarma]

Sorry not to have answered this before . I guess one way or another the question has become moot. But if you, or anyone else reading this still wants an answer, here goes ...

Gratuity calculations in Dubai

1. She has either a limited or unlimited contract. If a contract is up for renewal, then that sounds like a limited contract to me, since an unlimited contract is by definition, unlimited ... or indefinite. It is valid until resignation by employee, or termination by employer.

2. There might be a grey area where employers ask employees if they want to renew an "unlimited" contract each year, or every 2 years, or etc. I can't really speculate on what this means. The contract should clearly say whether it is a limited or unlimited contract.

3. As you are describing her contract as an "unlimited" contract, and she will have completed 3 years of service, that means she is entitled to two-thirds of the severance pay calculation for someone who completes a "limited" contract of 3 years, which for your friend, works out to be 14 days per year of service. If she completes less than 3 years, even by a day, then she'll only get 7 days per year of service (pro-rata for any incomplete years).

4. Remember that gratuity is calculated on the base salary only, any allowances (transport, housing, etc) specified in the contract are excluded.

5. The gratuity payment is based on the assumption that she gives the correct notice period for her resignation (usually 30 days for unlimited contract holders).

6. If she in fact has a "limited" contract specified as 3 years, and completes it, then she is entitled to 21 days salary per year of employment as a gratuity payment.

7. Having to hand in a non-renewal or renewal letter sounds to me like something applicable to a "limited" contract. To renew or not renew an "unlimited" contract doesn't make sense to me.