End of Service Benefits for Limited Contract in UAE: What You Need to Know
End of Service Benefits (EOSB) in the United Arab Emirates (UAE) are a set of benefits provided to employees who complete their contract or service period with an employer. These benefits are mandated by the UAE Labor Law and are applicable to both limited and unlimited contract employees. However, the calculation and entitlement of EOSB differ between the two contract types.
In this article, we will take a closer look at end of service benefits for limited contract employees in the UAE.
What is a Limited Contract?
A limited contract is a type of employment contract that is valid for a fixed period, usually for a term of two years. The contract specifies the terms and conditions of employment, including the job role, salary, benefits, and duration of the contract.
Under a limited contract, both the employer and employee have agreed to the terms and conditions of the employment for the duration of the contract. Breaking the contract before the end of the term would result in a breach of contract and could lead to legal consequences.
End of Service Benefits for Limited Contract Employees
Limited contract employees are entitled to end of service benefits upon completion of their contract. The calculation of EOSB for limited contract employees is based on the following factors:
1. Basic Salary: The basic salary is the main factor that determines the calculation of EOSB. The basic salary refers to the regular salary paid to the employee, excluding any allowances, bonuses, or commissions. The calculation of EOSB is based on the number of years of service and the basic salary.
2. Duration of Service: The length of service is another important factor that affects the calculation of EOSB. Limited contract employees are entitled to EOSB after completing their contract period. If an employee completes their contract period of two years, they are entitled to EOSB for two years of service. If they complete their contract period of five years, they are entitled to EOSB for five years of service.
3. Performance: Employers may also consider the performance of the employee when calculating EOSB. If an employee has performed exceptionally well during their service period, an employer may offer additional benefits or rewards upon completion of the contract.
4. Termination of Contract: If a limited contract is terminated before the end of the contract period, the employee may not be entitled to EOSB. However, if the contract is terminated by the employer due to reasons beyond the employee`s control, such as redundancy or company liquidation, the employee would be entitled to EOSB.
Calculation of EOSB for Limited Contract Employees
The calculation of EOSB for limited contract employees is based on the total number of years of service and the basic salary. As per UAE Labor Law, EOSB is calculated as follows:
– For the first year of service, limited contract employees are entitled to 21 days of basic salary.
– For the second year and subsequent years of service, limited contract employees are entitled to 30 days of basic salary for each year of service.
For example, if an employee has completed a two-year limited contract with a basic salary of AED 5,000 per month, their EOSB would be calculated as follows:
– 21 days of basic salary for the first year of service: AED 5,000 x 21 = AED 105,000
– 30 days of basic salary for the second year of service: AED 5,000 x 30 = AED 150,000
The total EOSB for the two-year contract would be AED 255,000.
Conclusion
End of Service Benefits for limited contract employees in the UAE are an important aspect of employment regulations. Employers are required to provide EOSB to their employees upon completion of their contract period. It is important for both employers and employees to understand the calculation and entitlement of EOSB to avoid any disputes or legal consequences.
If you are a limited contract employee in the UAE and have completed your service period, make sure to discuss your EOSB entitlement with your employer. As a professional, I hope this article has provided you with a better understanding of end of service benefits for limited contract employees in the UAE.
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