Can employees ask for a severance package in their job contract?

Question: I am planning to move to the UAE this summer and have been exploring job opportunities. However, none of my potential employers I’ve spoken to were willing to offer a severance package. I’d like to understand if there are any laws or regulations about this. Is it possible to include a “golden handshake” clause in my job contract? And if I do, will it be legally binding?

- Ashish Mehta

Answer: It is assumed that you are considering an employment offer from a company based in the UAE mainland. In that case, the UAE Employment Law, along with related cabinet resolutions and the Civil Transactions Law, would apply to your situation.

In the UAE, an employee who has completed at least one year of continuous service is entitled to severance pay at the end of his or her service with an employer. The severance pay of an employee is calculated on his or her basic salary. This is in accordance with Article 51(2) of the Federal Decree Law no. 33 of 2021 Regarding the Regulation of Employment Relationships and its amendments (“UAE Employment Law”), which states:

“The full-time foreign employee, who completed a year or more in continuous service, shall be entitled to end-of-service benefits at the end of his service, calculated according to the basic salary as per the following:

A salary of (21) twenty-one days for each year of the first five years of service;

A salary of (30) thirty days for each year exceeding such period.”