When employees of companies based in Dubai’s Free Zones such as Jebel Ali go on leave, they are only paid accommodation allowance on top of the basic pay. That roughly translates to about 56 percent of the regular salary of the employees. Is such a practice within legal limits?
For people working in the Jebel Ali Free Zone, their employment is governed by the Jebel Ali Free Zone Authority (JAFZA). Employers in such scenarios are subjected to the provisions of Federal Law No. (8) of 1980 regulating Employment Relations in the UAE (the ‘Employment Law’). They are also subjected to the rules and regulations put in place by the JAFZA. This falls in line with Rule 11.5.3 of the Jebel Ali Free Zone Rules, 2017 (Seventh Edition), which states:
11.5.3: A customer and a sponsored employee may negotiate the terms and conditions of employment, provided the agreement is not contrary to these free zone rules and is in accordance with the Federal Labour Law No. 8 of 1980.”
Employees availing their annual leave are compensated with their annual leave salary which consists of their basic pay and housing allowance wherever applicable. This is in accordance with the Employment Law’s Article 78. According to that article:
Each employee shall be entitled to his basic salary and the housing allowance, if applicable, in respect of his days of annual leave … “
As the law clearly states, employees’ annual leave salary is only supposed to consist of the housing allowance and the basic pay made out every month.
However, there is a way around the law and get more money as a part of the annual leave salary. That entirely depends on the kind of contract the employees have with their employer. If the employment contract (registered within JAFZA) mentions that the employee’s annual leave consists of the entire monthly salary, then that particular employee is entitled to the full amount. In a scenario such as this, employers can not quote Article 78 of the Employment Law and deny employees their full monthly salary while paying annual leave salary.
This provision for the employees is in accordance with Article 7 of the Employment Law. According to that article, “Any conditions contrary to the provisions of this law, albeit precedent to the date of effectiveness, shall be null and void unless they are more advantageous to the employee.”