Qatar Law No.(14) of 2004 (Labour Law) governs the terms of employment for the majority of individuals working in Qatar and establishes their minimum rights and obligations. These rights include an employee’s entitlement to be paid a sum of money by their employer on the termination of their employment locally referred to as an “end of service benefit or gratuity” (EOS). There may be various other termination payments, such as accrued but untaken holiday, payable to employees when their employment terminates however, these are beyond the scope of this article.
Who is excluded from the Labour Law?
The Labour Law excludes the employees of Qatar Petroleum and its corporate establishments whose employment is governed by special laws; it also excludes Government/public employees whose employment is governed by the provisions of Law No.(8) of 2009 (Human Resources Law). In addition members of the armed forces, the Police, employees at sea, casual, domestic and agricultural employees and dependants are excluded from the Labour Law. Finally mention should be made of the Qatar Financial Centre (QFC) and the Qatar Science and Technology Park both of which each have their own employment regulations. Where individuals are excluded fro
m the Labour Law their employment is subject to alternative legal and regulatory provisions, including the Human Resources Law, which may or may not include the provisions of a form of EOS.
Who qualifies for EOS?
In addition to any other termination payments, employees whose employment is subject to the Labour Law are entitled to receive EOS provided they have completed at least one year’s continuous service with their employer when their employment is terminated.
If an employee has had their employment terminated lawfully for gross misconduct, (e.g. they have submitted fraudulent documentation, have caused material financial loss, etc), they will not qualify for EOS. However, employees who lawfully terminate their employment without notice in response to a material breach by their employer (e.g. physical assault, etc) should be paid EOS in addition to their other employment termination payments.
Employees who are entitled to receive a higher payment under their employer’s retirement or pension scheme than under their EOS, in most cases, will not be entitled to EOS in addition to the scheme benefits. Where, however, the scheme benefits are less generous than EOS, employees can choose to be paid EOS instead. If so, the employer must repay any contributions paid by the employee into the scheme, and/or any contributions paid into the scheme by the employer, on the employee’s behalf.
If an employee dies when they are working in Qatar and if they would have qualified for EOS then their employer is under an obligation to pay EOS to the employee’s heirs or beneficiaries in addition to any other employment termination payments which would have been payable to the deceased employee in the usual way.
How is EOS calculated?
Employers and employees can agree on the amount of EOS the employee will be paid on termination, provided the amount is equal to at least three weeks’ pay of the employee’s final basic salary, for every full year they have worked for the employer. Part years are pro-rated. Periods of valid leave, e.g. sick, maternity or annual leave, are generally included in the calculation. Periods of voluntary unpaid leave are generally excluded, but this depends on company policy.
If the employee’s employment began before 6 January 2005, EOS for the period to 6 January 2005 should be calculated in accordance with the terms of the previous Qatar labour law which had more generous provisions for employees than those provided by the Labour Law. In addition the previous labour law permitted the employer and employee to opt out of EOS if the employee was foreign, worked for a national enterprise and agreed to opt out in writing. Such an opt out is no longer possible.
When is EOS payable?
The Labour Law provides for EOS to be paid when employment is terminated. Recent entrants to Qatar 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. A recalculation of the EOS should be undertaken and a final termination payment made to employees to ensure that full payments are made.