What Happens to an Employee’s Gratuity After Death in the UAE?

Gratuity is a mandatory benefit provided by employers to employees who have worked with them. It serves as a financial cushion and provides financial security to employees during major life transitions. However, one difficult question that many employees overlook is: What happens to an employee’s gratuity after death in the UAE?
 
Death can occur at any time, even during employment, and the financial strain can add to the emotional burden of losing a loved one. Understanding the legal process for claiming gratuity provides relief to both the employee’s family, offering financial support, and the employer, helping them comply with the law and avoid penalties. This article offers a clear guide to the laws, calculations, and procedures regarding gratuity payments after an employee’s death.

Resolution No. 720 of 2023 addresses the maintenance of employees’ entitlements especially gratuity after death, ensuring that their hard-earned money and benefits reach their family without delay. The resolution defines the employer’s responsibilities in the case of an employee’s death, outlining deadlines and penalties for non-compliance.

The employer’s role is crucial during this period once they are informed of the employee’s death, as the legal responsibility falls squarely on them. The legal obligations of the employer include,

Once the employee’s death is confirmed or when the employer becomes aware of it, it is the legal obligation of the employer to initiate the process of revoking the work permit through the proper channels, as advised by MOHRE.

The benefits must be delivered to the employee’s beneficiaries or legal heirs within 10 days of the employee’s death, or within 10 days of the employer becoming aware of the death.

Article 15 of Decree Law No. 33 of 2021, lists all the benefits of employee entitlements as follows, which include:

• End of Service Benefits (Gratuity)
• Settlement of Unpaid Salary
• Payment in terms of Leave Balance or any other Dues

Other Employer Responsibility After Employee’s Death

• Arrangements for Repatriation or Burial: If the employee is from a foreign country, the employer will cover all expenses for transporting the deceased to the employee’s home country or for burial in the UAE, provided this request is made by the family.
• Required Documentation and the Process for Claiming Benefits: The employer is responsible for assisting the family with the required paperwork, which generally includes an attested death certificate, copies of the passport and visa, and legally attested documents from the family’s home country verifying their status as legal heirs.

The demise of an employee will be treated as the end of the contract, and they will be entitled to the full gratuity, similar to resignation or termination.

The most significant benefit for the deceased’s family will come from the gratuity. As a legal heir or employer, you should be aware of how to calculate the gratuity. Gratuity is based on the last basic salary drawn (excluding allowances and perks). Manual calculation can be tricky and prone to errors, so here is a Free Online Gratuity Calculator based on MOHRE guidelines to provide an accurate estimate of end-of-service benefits.”

Once the entitlements are calculated, the next step is to identify the legal heirs of the entitlements. The subsequent procedure depends on the arrangements made by the employee,

The easiest way is if the employee, during their lifetime, has mentioned the beneficiaries in their employment file or has a registered will (through DIFC or ADGM Wills Service) specifying who will receive the benefits and in what percentage. In this case, the employer will directly hand over the gratuity and all dues to the nominated beneficiary.

If the employee has not mentioned any beneficiaries, the gratuity will be disbursed according to the law. For Muslims, the distribution will follow Sharia inheritance law, and the funds will be allocated among the family or legal heirs. For non-Muslims, in the absence of a will, the distribution will be made in accordance with UAE law.

If the employer is unable to identify the employee’s beneficiaries or legal heirs, it is the employer’s responsibility to submit the gratuity and all entitlements to the Ministry’s treasury account within the stipulated period.

Successfully navigating this process demands proactive engagement from employees and careful attention from employers.

If the deadline is not met, the ministry may suspend the establishment’s file until the employer provides proof of payment or until the ministry is satisfied. Being non-compliant could also damage the employer’s reputation.

This is the simplest and most effective way for an employee to spare their family from a lengthy, tiring, and costly process involving courts and lawyers, while also protecting them from financial hardship during a difficult time.

Families encountering challenges in claiming their dues have various options for support. They can submit a complaint to MOHRE, seek assistance and document verification from their home country’s embassy or consulate, or, if necessary, take legal action through the UAE Labour Courts to assert their rights.

According to the new labor law, if an employee is absent from work for 7 consecutive days without notifying the employer, the employer must inform the ministry about the continued unexplained absence. Further actions will be taken by the ministry.

The UAE Labour Law provides a transparent, employee-friendly, and well-regulated system, making it one of the best employment destinations for any worker. At the same time, it is the employee’s duty to designate a nominee or beneficiary in advance, which will save their family from complex legal procedures.

The resolution underscores the UAE government’s commitment to labour protection and to ensuring a fair and dignified environment for employees. As noted, after an employee’s death, the UAE Labour Law imposes a clear duty on employers to act responsibly and with compassion in such situations. While the loss of life is tragic, financial hardship should not follow.