GCC Laws
Termination and Severence Pay

Termination and Severence Pay

Article 113 - Termination of Employment Contracts

Q. When does an employment contract terminate?

An employment contract can end in several ways:

1. Mutual agreement of both parties in writing.

2. Expiry of the contract term, unless expressly extended.

3. Termination for convenience of either party to an indefinite term contract, following rules about notice and valid grounds for termination.

Article 114 - Employment Contract End Due to Death or Disability

Q. How does an employment contract end due to death or disability?

An employment contract doesn't end due to the employer's death unless it's linked to their person. The contract ends if the worker dies or is fully disabled, certified by the competent health authority. If partially disabled but capable of suitable work, the employer should assign them such work and pay a corresponding wage.

Article 115 - Consequences of Revoking a Definite Term Contract

Q. What are the consequences of revoking a definite term contract?If an employer revokes a definite term contract for reasons other than those in Article 120, they must compensate the worker for incurred damages. Compensation can't exceed three months' aggregate wage or the remaining contract period, whichever is shorter.

Article 116 - Worker Revoking a Contract for Specific Reasons

Q. What happens if a worker revokes a contract for specific reasons?

If a worker revokes a contract for reasons other than those in Article 121, they must compensate the employer for damages, up to half a month's wage for three months or the remaining contract period, whichever is shorter.

Article 117 - Notice Requirements for Indefinite Term Contract Termination

Q. What are the notice requirements for indefinite term contract termination?

Either party in an indefinite term contract can terminate it with a 30-day written notice. Daily-paid workers have different notice periods based on employment duration.

Article 118 - Notice Period for Termination

Q. What happens during the notice period for termination?

Throughout the notice period, the contract remains in effect. The worker is entitled to full pay during this period based on their last wage. The worker should continue their duties if the employer requests. The notice requirement can't be waived or shortened, but it can be extended by mutual agreement.

Article 119 - Compensation for Failure to Meet Notice Requirement

Q. What's the compensation if the notice requirement isn't met?

If either party reduces or fails to serve notice for termination, the forbearing party must pay the other party "compensation in lieu of notice." This compensation is equal to the worker's wage for the entire or reduced notice period, regardless of whether damages occurred.

Article 120 - Employer Dismissal Without Notice

Q. When can an employer dismiss a worker without notice?

An employer can dismiss a worker without notice if the worker:

  • Assumes a false identity, submits fake documents, or false certificates.
  • Is on probation and is dismissed during or at the end of probation.
  • Causes significant material loss due to a fault, reported within 48 hours to the labor department.
  • Disobeys written safety instructions at work.
  • Defaults on contract duties and doesn't rectify it after written warning.
  • Is convicted of a crime against honor, honesty, or public morals.
  • Reveals employer confidential information.
  • Is intoxicated or under drug influence during work.
  • Assaults employer, manager, or colleagues during work.
  • Absents for over 20 non-successive days in a year or over seven successive days.

Article 121 - Worker Abandonment of Work Without Notice

Q. When can a worker abandon their work without notice?

A worker can abandon their work without notice in these cases:

  • When the employer fails to meet their obligations according to the contract or the law.
  • If the worker is assaulted by the employer or the employer's legal representative.

Article 122 - Arbitrary Termination

Q. When is a worker's termination considered arbitrary?

A worker's termination is considered arbitrary if it's unrelated to the work. This includes terminations prompted by formal complaints filed by the worker with competent authorities or valid legal actions against the employer.

Article 123 - Compensation for Arbitrary Dismissal

Q. What compensation can a worker receive for arbitrary dismissal?

If a worker is arbitrarily dismissed, the court can order the employer to pay compensation. This compensation, determined by the court, should consider the nature of work, extent of damage, period of service, and work circumstances. The compensation can't exceed the worker's wage for three months, based on their last wage. This compensation is separate from gratuity and compensation in lieu of notice.

Article 124 - Termination for Medical Reasons

Q. Can an employer terminate a worker for medical reasons?

An employer can't terminate a worker for medical reasons before the worker exhausts all legally due leave periods. Any agreement contrary to this is void.

Article 125 - Obligations at the End of a Contract

Q. What does the employer need to provide at the end of a contract?

Upon contract expiry, the employer must provide the worker with a free end of service certificate. This certificate should include employment dates, total service period, nature of work, last wage, and supplements. The employer should also return any certificates, documents, and tools belonging to the worker.

Article 126 - Legal Status Change of a Firm

Q. What happens if a firm's legal status changes?

Valid employment contracts at the time of a firm's form or legal status change remain in force between the new employer and workers. The service is considered continuous. Both original and new employers are jointly liable for obligations from employment contracts for six months after the change. After this period, the new employer solely bears the liability.

Article 127 - Non-Competition Clause

Q. Can a worker compete with their former employer?

If a worker's job allows them to learn about clients or business secrets, the employer can require them not to compete or join a competing enterprise after contract termination. This is valid if the worker is at least 21 years old, and the agreement is reasonable in terms of time, place, and business nature to protect the employer's interests.

Article 128 - Non-National Worker Changing Jobs After Abandoning Work

Q. Can a non-national worker change jobs after abandoning work?

A non-national worker who abandons work without a valid reason during a definite term contract can't take up other employment for one year. No other employer can knowingly hire them before this period.

Article 129 - Non-National Worker Changing Jobs After Notifying Termination

Q. Can a non-national worker change jobs after notifying termination?

A non-national worker who notifies the employer of termination during an indefinite term contract but abandons work before the notice period can't take up other employment for one year. No other employer can knowingly hire them before this period.

Article 130 - Non-National Worker Changing Jobs With Consent

Q. Can a non-national worker change jobs with consent?

A non-national worker can change jobs before the specified periods if the Minister of Labour and Social Affairs approves it based on the original employer's consent.

Article 131 - Cost of Repatriation After Contract Expiry

Q. Who bears the cost of repatriation after contract expiry?

After contract expiry, the employer bears the cost of repatriation to the point of hire or any agreed point. If the employer doesn't cover the cost, competent authorities will, and they can recover expenses from the employer. If the worker is responsible for termination, they bear their repatriation costs if they can.

Article 131 (repeated 1) - Repatriation Expenses

Q. What does "repatriation expenses" cover?

Repatriation expenses include the worker's travel ticket, family travel expenses, and shipping costs for personal effects. If provided accommodation, the worker should vacate it within 30 days from termination. If contested, expenses are determined within a week. If the worker overstays, the Ministry takes measures for eviction.

Article 131 (repeated 2) - Role of a Bank Guarantee

Q. What's the role of a bank guarantee in this context?

The employer must submit a bank guarantee to the competent labor department. The guarantee covers the employer's obligations under Articles 131 and 131 (repeated) of this law. Deductions from the guarantee require a court judgment, except for certain cases. The Ministry can deduct due amounts for repatriation and pay the worker from this guarantee.

Article 132 - Entitlement to Severance Pay

Q. When is a worker entitled to severance pay?

A worker with one or more years of continuous service is entitled to severance pay at contract end. Absences without pay aren't included in service calculation. Severance pay is calculated as:

  • 21 days' wage for each of the first five years.
  • 30 days’ wage for each additional year, with a maximum of two years' wage.

Article 133 - Severance Pay for Partial Years of Service

Q. Is a worker entitled to severance pay for partial years of service?

A worker is entitled to severance pay for partial years of service if they completed one continuous year.

Article 134 - Calculation of Severance Pay for Different Payment Types

Q. How is severance pay calculated for different payment types?

Severance pay is based on the last due wage for monthly, weekly, and daily paid workers. For piecework, it's based on the average daily wage from Article 57. Excluded from this wage calculation are benefits like in-kind payments, housing, transport, travel allowances, overtime pay, bonuses, and other allowances.

Article 135 - Deductions from Severance Pay

Q. Can an employer deduct from severance pay?

An employer can deduct owed amounts from the worker's severance pay.

Article 136 - Retroactive Application of Severance Pay

Q. When does the right to severance pay apply retroactively?

Severance pay doesn't apply retroactively to cases preceding the enforcement of this law, except for National workers. Existing rights based on previous labor laws, contracts, agreements, or firm rules remain unaffected. If a worker dies, their severance pay goes to legal heirs.

Article 137 - Severance Pay for Specific Service Duration

Q. What severance pay does a worker receive for specific service duration?

For a non-national worker under an indefinite term contract who abandons work after 1-3 years, they're entitled to one-third of severance pay. For 3-5 years, it's two-thirds, and for over five years, it's full severance pay.

Article 138 - Abandonment of Employment Under Definite Term Contract

Q. What is the eligibility criteria for severance pay under Article 138?

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 139 - Forfeiture of Severance Pay Entitlement

Q. Why would a worker forfeit their severance pay according to Article 139?

A worker shall forfeit entitlement to his entire severance pay in any of the following two cases:

1. If he is dismissed from service for any of the reasons specified in Article 120 hereof or if he abandons his employment in order to avoid being dismissed in accordance with that Article.

2. If he abandons his employment of his own accord, otherwise than in either of the two cases specified in Article 121 hereof, without notice (in the case of indefinite term contracts) or before completing five years of continuous service (in the case of definite term contracts).

Article 140 - Severance Pay and Provident Fund

Q. If the rules of the fund do not stipulate that the amounts paid by the employer are in discharge of his legal obligation toward the severance pay, what will the worker receive?

Where a 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 under the Law, whichever is the greater. Where the rules of the fund do not stipulate that the amounts paid by the employer are in discharge of his legal obligation toward the severance pay, the worker shall receive whatever is due to him in the provident fund in addition to the statutory severance pay.

Article 141 - Choice Between Retirement Pension and Severance Pay

Q. Why would a worker choose between retirement pension and severance pay, as outlined in Article 141?

Where a firm has a retirement, insurance, or a similar scheme, a worker who is entitled to a retirement pension may opt for treatment under the said pension or severance pay or under the pension or insurance scheme, whichever is more advantageous to him.

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