What to do if UAE company claims it doesn’t have funds to pay gratuity

Know your legal rights in the UAE.

Question: I worked for a company in Ajman for 11 years. Recently, there has been a lot of issues with pending salaries at the firm, so I decided to submit my resignation. I am now concerned about my end-of-service benefits. If a company claims that it doesn’t have the funds to settle my dues, what are the legal actions I can take to demand payment?  

Answer

We assume that you have resigned from your employment by serving the stipulated notice period mentioned in your contract. Therefore, the provisions of Federal Law No. (8) of 1980 regulating Employment Relations in the UAE (Employment Law) and the subsequent resolutions issued by the Ministry of Human Resources and Emiratisation (MoHRE) are applicable.

It should be noted that an employee in the UAE is entitled to end-of-service benefits if he/she has completed one year of continuous service with his/her employer. As you have completed 11 years, you are entitled to receive your severance pay, which is calculated based on 21 days’ basic salary for each year of your first five years in service and then 30 days’ salary for each year of the remaining period. This is in accordance with Article 132 of the Employment Law.

If your employer does not pay your end-of-service benefits along with your pending salary, you may file a complaint with the MoHRE. And if the matter is not settled amicably between you and your employer, the ministry may issue a letter allowing both parties to file a case in court. Once it is heard in court and the judgment is issued in your favour, your employer will be obliged to settle the amount mentioned in the ruling. You should then file execution proceedings against your employer. 

However, if the company still fails to settle the amount mentioned in the judgment, the execution court will attach the assets of your employer, sell them, and pay the amount due to you. This is in accordance with Article 4 of the Employment Law, which states: “All amounts payable to the employee or his beneficiaries under this law shall have lien on all the employer’s movable and immovable properties. And payment thereof shall be made immediately after payment of any legal expenses, sums due to the public treasury and Sharia alimony awarded to wife and children.” 

KNOW THE LAW

If a company fails to settle an employee’s unpaid salary and gratuity after a court ruling has been issued, the execution court will attach the assets of the employer, sell them, and pay the amount specified in the judgment. 

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom, Singapore, and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

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