New UAE Labor Law about Final Settlement Payment timeline
The UAE Labor law entitles employees in the country to specific set of end of service benefits. EOS benefit is paid after the termination of the employment contract for the tenure served with the organization.
Ministry of Human Resources and Emiratisation (MOHRE) has announced the introduction of Federal Decree Law No. 33 of 2021 that will regulate labor relations and employment practice in UAE. The New UAE Labor Law is the most substantial change to the existing UAE Labor Law (UAE Federal Law No. 8 of 1980) since its inception, and it will replace the Current UAE Labor Law entirely. The New UAE Labor Law came into effect on February 2nd, 2022.
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Comparison Between the previous Law and New Law:
Additional clauses and significant changes in End of Service payment timeline as per New UAE Labor Law
As per the new UAE Labor Law, all End of service entitlement must be paid within 14 days from the last working day of the employee. This is an additional item added in the new law as there was no such timeline for End of service entitlement in the previous law.
Frequently Asked Questions
What are the various components included in the final settlement calculation of an employee in UAE?
- End of Service Gratuity
- Repatriation ticket, if applicable
- Notice period pay, if applicable
- Any unutilized leave i.e. Vacation pay
- Unprocessed Salary
- Any other benefits or compensation mentioned in the Employment Contract
- Any other outstanding payment or deduction
For more information about Final Settlement calculation in UAE, please follow the link
What is End of service Gratuity and who is eligible for this benefit?
Gratuity is a monetary payment eligible to an employee as a lump sum at the end of his tenure provided that the period of service exceeds one year.
For more information about End of service Gratuity in UAE, please follow the link
Is WPS Payment processing mandatory for EOS?
WPS is not mandatory for EOS payment, it is recommended. Company can issue cheque also.
For more information about WPS in UAE, please follow the link
Is there is any deadline for making EOS payment to the employee?
Yes, the end of service benefit must be paid within 14 days of the end of the employment contract or termination.
Is the employee eligible for full final settlement amount within 14 days or should only gratuity be paid within 14 days?
It is the responsibility of the company to pay all entitlements and clear all the dues within 14 days from the last working day of the staff.
Relevant article regarding “EOS Payment Timeline” from New UAE Labor Law (Federal Decree-Law No 33 of 2021):
Article 53– Paying the Worker’s Entitlements at the End of the Contract Term
The employer shall pay to the worker, within (14) fourteen days from the end date of the contract term, his wages and all his other entitlements stipulated herein, and resolutions issued for its implementation, the contract, or the establishment’s by-laws.
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