Top 9 Valid Reasons your Employer Denies Gratuity Payment

It’s quite stressful if your employer denies gratuity payment or you don’t get end-of-service benefits even after completing one year of service with full dedication and hard work.

However, the UAE New Labor Law states that the company or employer is liable to pay gratuity to his employees; therefore, they can’t withhold the employee’s gratuity amount until there are certain legally valid reasons behind it. You should know about your legal employment rights and company rules to avoid such scenarios. Keep reading to know the major reasons behind non-payment of gratuity and how to tackle them!

Employer Denies Gratuity Payment: 9 Legal Aspects and Rules

The employer may use delaying tactics without any valid reason or there may be several potential causes that you’re not getting gratuity benefits. Some of these reasons which your employer denies gratuity payment are mentioned below:

1. The worker has not completed one year of service with the employer.
2. As per Article 138 of the UAE Labor Law, the employee under a fixed-term contract shall not be entitled to gratuity benefits upon leaving a job earlier than 5 years.
3. Article 139b states that the employee under an unlimited contract may be deprived of gratuity if he resigns without providing adequate prior notice.
4. If the worker violates Article 44 of the UAE Legislation Law, i.e. he declares a false identity, nationality, or certificate in front of the employing company. In such situations, the employer may dismiss the employee, take legal notice, or file a penalty against him.
5. The employer has provided proof to the Labor Department about the employee’s violation of company rules, illegal activities, harassment, or property damage in the office.
6. If the employee has been declared convicted by the jury’s verdict for any case of dishonesty, ethics, fraud, or revelation of the company secrets as described in Article 40 of the Labor Law.
7. Article 120 states that the employer may dismiss his worker without prior notice if he remained absent for more than 7 consecutive days or 20 non-consecutive days in a year without any obvious reason.
8. The employee doesn’t have full knowledge about his legal rights of gratuity or end-of-service perks in the UAE. You can calculate your estimated gratuity through an online gratuity calculator to know the estimated amount for your service period. It helps to compute your total expected gratuity depending on the type of contract, service duration, and reason for leaving your job.
9. According to Article 88 of UAE Labor Law, employees are not allowed to work for any other company during annual or sick leave. If the worker commits such an unlawful act, the company may terminate his contract or deprive him of end-of-service gratuity entitlements.

What should You do if an Employer Denies Gratuity Payment?

Sometimes, the ex-employer denies gratuity payments to the employees, even after fulfilling all requirements of gratuity entitlement. Consequently, a dispute arises between both parties. In such a situation, the employees should immediately file a complaint in the UAE Labor Office to take legal action against the employer in the Labor Court. However, before taking legal action, ensure that you’ve not been involved in any illegal activities during your employment record.

Check Sample Letter to Claim Your Gratuity.

What to do if a UAE Company Claims Non-availability of Gratuity Funds?

The UAE New Labor Law clearly mentions that an employer or a company is liable to pay gratuity to his employees on completing one year of service. If the employer doesn’t pay gratuity perks and unpaid salary amounts, you must contact and file a complaint in the UAE Labor Office, Labor Court, or MoHRE. The court will bind the company to pay the pending dues if the judgment is in your favor.

The Employer denies Gratuity Even after Court Order: What Should I do?

The execution court will seize the company’s assets, sell them, and pay the sum owed to you if the corporation still refuses to pay the amount specified in the judgment. According to Article 4 of the Employment Law, “Employee’s payable amounts would be charged from the employer’s movable and immovable possessions and the payment shall clear immediately if an employer denies gratuity payment even after court orders.

Bottom Line

The employees in the UAE must know their legal rights and the rules of the employing company to get paid their gratuity entitlements. If your employer denies gratuity payment by making false excuses or delaying tactics, you must immediately contact MoHRE or UAE Labor Office to file a complaint against him.