Qatar Law No (14) of 2004, the Labour Law, governs the terms of employment of the majority of individuals currently working in the State of Qatar.
The Labour Law establishes the minimum rights to which employees are entitled when working in Qatar and their obligations in relation to the same. One such right is the entitlement of an employee to be paid a sum of money, referred to as an end-of-service benefit (EOS), by his (or her) employer upon the termination of their employment with that employer.
This article will now consider EOS further in relation to who will qualify for the payment, the timing and value of the payment and on what occasions an employer avoid such a payment.
Labour Law: who is excluded?
The Labour Law (Article 3) excludes individuals employed by the following employers from its provisions and regulation:
lMinistries and other governmental organisations, public institutions, corporations and companies which are established by Qatar Petroleum (QP) by itself or with others and individuals whose employment is regulated by special laws.
l The Qatar armed forces, the police and individuals employed at sea.
In addition the Labour Law excludes individuals working in the following roles from its provisions and regulation:
l Casual workers.
l Domestic workers, eg. drivers, nurses, cooks, gardeners, etc.
l Family members and dependents of individuals working in Qatar.
l Agricultural workers, including, individuals involved in grazing, product processing and marketing, equipment operators and those individuals who repair agricultural equipment.
The provisions of the Labour Law, or any part thereof, may be applied to the employment of the individuals set out in the last four bullet points above subject to a resolution of the Council of Ministers upon the recommendation of the Minister.
Where individuals are excluded from the provisions of the Labour Law, their employment is subject to alternative legal and regulatory provisions, eg. Law No (8) of 2009, Human Resources Law, governs the rights of Ministries and other Governmental organisations and the QFC Employment Regulations govern the employment of the employees of Qatar Financial Centre Authority licence holders.
For the purposes of this article we have not considered any employment termination payments.
EOS: who will qualify?
The Labour Law (Article 54) provides in summary that in addition to any other payments to which an employee is entitled on the termination of his employment, he shall also be entitled to EOS provided he has worked for the same employer for a period of one year or more.
Employees who have had their employment validly terminated (Article 61) for reasons of gross misconduct, eg. submitting fraudulent documentation, causing material financial loss, etc, without notice will not qualify for an EOS termination payment.
Employees who validly terminate their employment (Article 51) without notice as a result of an employer’s gross misconduct, eg. material breach, physical assault, etc, should qualify and be paid EOS in addition to their other employment termination payments.
Employees who are entitled to a greater benefit under their employer’s retirement or similar scheme will not generally be entitled to EOS in addition to those scheme benefits (Article 56). Where for whatever reason the scheme’s benefits are less than EOS on the termination of an employee’s employment he can choose to be paid EOS and an employer will be required to repay to the employee any scheme contributions which the employee may have paid or the employer may have paid on the employee’s behalf.
If an employee dies when he is working in Qatar and if he would have qualified for EOS then the employer is under an obligation to pay EOS to the employee’s heirs in addition to his other employment termination payments.
EOS: how is it calculated?
The Labour Law (Article 54) provides in summary that the employer and employee can agree on the amount of EOS to which an employee will be entitled when his employment terminates provided the amount equals to or is higher than three weeks’ of the employee’s termination basic salary for every full year that he has worked for the employer. Part years are pro rated.
EOS is usually calculated using calendar days, but may be calculated using working days if more appropriate given the industry working practices. Periods of valid leave, eg. sick, maternity or annual leave are generally included in the calculation. Periods of voluntary unpaid leave are generally excluded, but this will usually be determined by company policy in relation to the same.
If an employee was employed by an employer prior to the Labour Law taking effect, ie. January 6, 2005, EOS for the period to January 6, 2005 may be calculated in accordance with the terms of Law No (3) of 1962, the previous Labour Law. EOS under this law is more generous than under the Labour Law given there is a calculation escalation after five years. The previous Labour Law permits the employer and employee to opt out of EOS payments where one of the parties terminates employment for reasons of gross misconduct, but also if the employee was foreign, worked for a national enterprise and had agreed in writing. Such an opt out is not possible under the provisions of the Labour Law.
EOS: when is it payable?
The Labour Law provides for EOS to be paid to qualifying employees when their employment is terminated. Recent entrants to the Qatar market have started introducing payment policies which provide for employees to be paid EOS throughout the duration of their employment in order to ease cash flow by avoiding material payments having to be made on termination.
Where such policies are implemented it will be important for employers to ensure that their employees receive their full EOS entitlement in compliance with the Labour Law when their employment terminates.
A recalculation of the EOS should be undertaken and a final termination payment made to employees to ensure that full payments are made.
lQatari Laws (save for those issued by the QFC to regulate internal business) are issued in Arabic and there are no official translations for the purpose of drafting this article, we have used our own translations and interpreted in the context of Qatari regulation and current market practice.
♦ If you would like further information please contact Emma Higham