How is the UAE`s Ex-Pat Population Broken Down into Nationalities, and Does This Impact Companies Required to Provide End of Service Benefits
The largest expat population is the Indian one, with 2,000,000 residents in the UAE. This makes up an astonishing 42% of the total population. Close behind, there is the Pakistani population with 1,200,000 residents, and the Filipino population at 700,000. The largest European population is easily claimed by the British, with a population of 240,000 mainly located in Dubai.
Each working member of the population is entitled to a gratuity when leaving a company. A gratuity is the UAE equivalent to severance pay in other countries. Individuals must receive their gratuity pay by law, as long as they have completed the term of contract under which they were hired.
For the first five years of service, each year entitles the individual to 21 days of basic salary. After this, each year entitles the individual to 30 days. The gratuity will continue to increase until it reaches the maximum legal amount, currently set at two years’ salary.
Nationality has no effect on the gratuity received by an individual, as everyone is entitled to their end of service benefits. A companies’ gratuity liability is much more heavily dependent on the size and retention of the workforce. For a large company, the risk of having to pay a large sum of gratuity at the same time can be quite large. If an economic or company related crisis were to lead to a large decrease in the workforce, the financial shock can cause substantial damage. It is therefore vital to have some sort of gratuity plan in place, ensuring the companies’ wellbeing in all scenarios.