Question: I am currently employed at a company in Dubai with a satisfactory salary. A start-up has extended a job offer to me that entails running the company. While I am eager to accept the offer, I would like to clarify my rights in the event of an unexpected shutdown of the company. Furthermore, would it be possible to include a clause in the contract that stipulates a severance amount should the company cease operations?
Answer: In the UAE, foreign employees who have completed at least one year of continuous service are entitled to end-of-service benefits, calculated based on their basic salary, as stipulated in Article 51(2) of the Federal Decree Law No. 33 of 2021. Specifically, employees earn 21 days of salary for each of the first five years and 30 days for each additional year of service.
Additionally, employers are mandated to settle employees’ entitlements, including end-of-service benefits, before closing operations. Failing to do so can result in penalties ranging from Dh100,000 to Dh1,000,000, according to Article 60(1)(d) of Federal Decree-Law No. 9 of 2024.
Your entitlement to these benefits arises after completing one year of continuous employment, and the relationship between employer and employee is governed by the employment contract and relevant laws. While it’s not necessary to include end-of-service benefits in your contract, you can negotiate with your employer to add a clause specifying these benefits for your peace of mind. This ensures clarity regarding your rights and entitlements should any unforeseen circumstances arise.
News Source: Khaleej Times
