UAE: Can Expatriate Employees Negotiate a Severance Package in Their Employment Contract?

Question:  I have been offered a high-profile position in a company based in Dubai and am planning to move to the UAE. Can I work in a severance package in my contract which would allow me to get an amount of money if I lose my job? How does that work? Please advise.

Answer: In the UAE, expatriate employees who have completed at least one year of continuous service are entitled to end-of-service benefits, as outlined in the Federal Decree Law No. 33 of 2021, which governs employment relationships. According to Article 51(2) of this law, the calculation of end-of-service benefits is based on the employee's basic salary.

The entitlements are as follows:

• 21 days of salary for each year of service during the first five years.
• 30 days of salary for each year beyond the five-year period.

Additionally, Article 8 of the Employment Law and Article 10(1) of Cabinet Resolution No. 1 of 2022 outline the required details for an employment contract, including the employer's name and address, employee's personal information, job role, salary, benefits, allowances, leave entitlements, notice period, and procedures for contract termination.

It is important to note that end-of-service benefits are automatically protected under the law and do not need to be specifically included in your employment contract. However, when reviewing your contract, ensure that your basic salary is clearly stated, as it will be used to calculate your end-of-service benefits.

If you wish to include a severance package in your contract, this can be negotiated directly with your prospective employer. Both parties can mutually agree to add such a provision, offering additional financial security in the event of job loss.

News Source: Khaleej Times