Gratuity, UAE and too many question marks

Gratuity, UAE and too many question marks

The recent commission-based gratuity ruling from a Dubai court ruling leads Kipp to many unanswered questions on its impact on companies and employees in the UAE.

June 28, 2011 3:48 by Eva Fernandes

The recent ruling of a Dubai court in favour of including commission income in an executives’ gratuity has had Kipp a little confused. Though part of us feels like employees generally have it a lot more difficult than employers in the UAE, the ruling is possibly the most beneficial outcome the plaintiff (and employees in general) could have hoped for. And although it is impossible to predict the precise impact it will have in the way contracts are going to be written and regulated in the country, it has paved a way for employees to renew their confidence in the system.
But before we get ahead of ourselves, here’s some background: The case involved an employee of a media and advertising company in Dubai who went to the Court of First Instance after his severance was calculated without considering his commission income. Though the courts initially rejected his case, he persevered and the case was upheld on appeal and finally reached Dubai’s highest court, the Court of Cassation.
And though this ruling is indeed momentous, it does not set a precedent for other cases to follow. In fact as Sara Khoja, a senior associate at Clyde & Co in Dubai who specialises in employment law pointed out to The National: “Article 134 [of the labour law] is very clear that end-of-service benefits are based on remuneration, and that does not include housing allowance, travelling allowance, education fees, overtime pay, allowances for recreation and social facilities (…) I would be really surprised if this judgment was going against that.”
So what exactly does this ruling mean for employees?
Well because the actual labour law in question hasn’t been changed, the fact remains that employers still do not need to consider commission as part of gratuity.
Kipp does think the take away message from all of this is that perseverance and a pretty expensive lawyer can probably get you far enough. That lawyers cost far too much in this country to even challenge a failure to recognise complete severance entitlements, is another question altogether.