Can UAE Managers Claim Enhanced Company Benefits After Employment Termination Under Company Policy?

A company’s internal employment policy cannot generally be used to reduce the minimum rights guaranteed to workers under UAE labour law. At the same time, employers are permitted to introduce schemes, regulations and contractual terms that provide employees with benefits more favourable than those prescribed by law. Where such a policy is valid and applicable to an employee, the more beneficial terms may prevail.

 

This principle is particularly relevant when an employee leaves a company and disputes arise over the calculation of annual leave payments or end-of-service benefits. A manager whose employment has been terminated may therefore be able to claim enhanced benefits under a company policy, even where the statutory calculation under UAE Labour Law would produce a lower amount.

 

Statutory Entitlements Upon Termination

 

Under Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, workers are entitled to payment of their statutory employment dues when their contracts come to an end. These include salary and other amounts due under the law, together with payment for accrued annual leave and, where applicable, end-of-service gratuity. The employer is generally required to settle the worker’s outstanding entitlements within 14 days from the date the employment contract ends.

 

The law makes a distinction between the salary paid while an employee is actually taking annual leave and the cash payment due for unused leave when employment ends. Under Article 29, a worker is entitled to annual leave, while the cash equivalent of accrued statutory leave at termination is calculated according to the basic wage. The implementing regulations likewise provide that, when service ends, the worker is entitled to the cash equivalent of the legally due annual leave balance based on the basic salary.

 

End-of-service gratuity is similarly calculated on the basis of the worker’s last basic wage, subject to the conditions and formula prescribed by the Labour Law. This means that allowances and other components of the overall remuneration package would not ordinarily be included in the statutory gratuity calculation.

 

Company Policies Can Provide Greater Benefits

 

The position changes, however, where an employer has voluntarily adopted a policy or employment scheme that gives workers better benefits than the statutory minimum.

 

Article 65 of the Labour Law expressly establishes that the rights provided by the legislation are minimum rights. It also makes clear that the law does not prejudice rights granted to a worker under another law, agreement, acknowledgement, regulation or employment contract where those rights are more beneficial to the worker.

 

The same article specifically permits an employer to establish and implement organisational programmes or regulations that provide workers with benefits more favourable than those prescribed by the Labour Law and its implementing regulations. If such a programme conflicts with the statutory provisions, the conditions that are more beneficial to the worker are to be applied.

 

This provision is important because it prevents an employer from simply arguing that a benefit contained in its own policy cannot be honoured because the Labour Law does not require it. The law establishes a floor for employment rights, rather than necessarily preventing employers from offering better terms.

 

When a Policy Can Strengthen an Employee’s Claim

 

In a case involving a manager whose employment has been terminated, the precise wording and application of the company policy would therefore be critical.

 

If the company’s regulations clearly state that a manager’s final annual salary dues are to be calculated on the basis of total salary, or that an annual increase allowance is to be included when calculating end-of-service benefits, the employee may have grounds to seek those additional amounts.

 

The existence of a policy alone, however, does not automatically establish that every provision applies to every employee or every situation. The employee may need to demonstrate that the policy was officially adopted, that it applied to the employee’s position and employment relationship, and that the relevant conditions were satisfied when the employment ended.

 

Employment contracts, employee handbooks, internal regulations, salary structures and written company policies can therefore become important evidence in determining whether an enhanced benefit was actually promised or granted.

 

The Difference Between Law and Company Policy

 

The distinction between statutory entitlement and enhanced contractual or policy-based benefits is important. For example, if the Labour Law provides that unused annual leave at termination is calculated using the basic wage, an employer cannot ordinarily reduce that statutory entitlement further. But if the employer has voluntarily undertaken to calculate the payment using a higher salary figure, that undertaking may provide the worker with a contractual or policy-based entitlement above the statutory minimum.

 

The same reasoning can apply to end-of-service benefits. Although the statutory gratuity is generally calculated using the basic wage, an employer may establish a more generous scheme under which additional salary components are taken into account.

 

The key question is therefore not simply whether the Labour Law requires the company to make the additional payment. It is whether the employer has created a binding obligation to provide a benefit that is more favourable to the worker.

 

Courts Can Determine Whether the Benefit is Enforceable

 

Where an employer rejects such a claim, the dispute may ultimately have to be determined through the UAE labour dispute resolution process and, where necessary, by the competent court.

 

A court can examine the employment contract, internal regulations, company policies and other evidence to determine whether the employee was entitled to the enhanced benefit and whether the policy was applicable at the time of termination.

 

An employee should therefore preserve copies of the relevant company policy, employment contract, salary records, written communications and any other documents showing how the benefit was applied to employees in the same category.

 

For a manager facing a final-settlement dispute, the fact that a benefit is not expressly required by the Labour Law does not by itself defeat the claim. Article 65 recognises the validity of more favourable employment arrangements, provided they can be established and are applicable to the worker’s circumstances.

 

Accordingly, a manager whose company policy provides for calculation of termination benefits on a more favourable basis than the statutory minimum may have the right to pursue the additional amount. Whether the company is legally bound by the particular policy, however, will depend on its wording, how it was adopted and applied, and whether its conditions cover the employee’s circumstances. Ultimately, the competent labour authorities or court can determine whether the policy creates an enforceable entitlement and whether the employee qualifies for the benefits claimed.