Dubai today has a growing private sector that is attracting professionals from all countries. As per UAE laws, one can begin working from the age of 18 till the age of 60, and in special cases even up to 70 years. Although the retirement age varies from job to job, expatriates working in the private sector who are over 60 years of age require the approval of the Ministry of Labour.
From 2011 onwards, private sector employees can now get two year extensions to work after their retirement age, as compared to the previous one year extensions. Fees for two year extensions up to the age of 65 range from AED 500 for first category companies, AED 800 for second category A companies, AED 1,700 for second category B companies, AED 2,200 for second category C companies and AED 5,200 for third category companies. For employees over the age of 65, in addition to the fees mentioned above, an additional AED 5,000 is charged with the labour card being valid for two years.
While expatriates working in the government & private sector are not eligible for pension, they are eligible for end-of-service benefits also known as gratuity or severance pay.
Calculation of Gratuity/Severance PayAccording to Article 132 of the UAE Labour Law, a worker who has completed one or more years of continuous service shall be entitled to severance pay at the end of his employment. The severance pay shall be calculated as follows:a. 21 days’ wage for each of the first five years of serviceb. 30 days’ wage for each additional year of service provided always that the aggregate amount of severance pay should not exceed two year’s wage.Severance pay shall be calculated on the basis of the wage last due, but shall not include whatever is given in kind, housing allowance, transport allowance, travel allowance, overtime pay, representation allowance, cashier’s allowance, children’s education allowance, allowance for recreational and social facilities and any other bonus or allowances (Article 134)Deductions in Severance PayWhere a worker under an indefinite term contract abandons his work at his own initiative after a continuous service of not less than one year and not more than three years, he shall be entitled to one-third of the severance pay. Such a worker shall be entitled to two-thirds of the said severance pay, if his continuous service exceeds three years up to five years and to the full severance pay if it exceeds five years. (Article 137)Where a worker under a definite term contract abandons his employment at his own initiative before the expiry of his contract period, he shall not be entitled to severance pay, unless his continuous period of service exceeds five years. (Article 138)Provident /Pension FundWhere the firm has a provident fund for the workers and the rules of the fund stipulate that whatever the employer pays into the fund for the worker’s account is in discharge of his legal obligation in respect of severance pay, the worker shall be paid the savings balance in his account or the severance pay due the Law, whichever is greater. Where the rules of the fund do not stipulate that the amounts paid by the employer are in discharge of his legal obligation towards the severance pay, the worker shall receive whatever is due to him in the provident fund in addition to the statutory severance pay. (Article 140)