In this article, our employment experts provide a brief summary of the key provisions regulating the termination of employment and the payment of end of service gratuity in Qatar.
The Labour Law1 governs terms of employment except for those employees who are expressly excluded by virtue of Article 3 including workers from ministries and governmental organisations, companies established by Qatar Petroleum and casual and domestic workers, for example. Where individuals are excluded from the Labour Law, their employment is subject to alternative legal and regulatory provisions.
Under the Labour Law, an employer can subject the employee to a single probationary period of not more than 6 months. During this period, the employer may terminate the employment contract if it is determined that the employee is incapable of carrying out the work by serving three days' written notice.
Termination with notice
Article 49 of the Labour Law provides that an indefinite or unlimited term contract may be terminated by either the employer or the employee providing written notice at any time. There is no requirement for the party serving notice to provide a reason for the termination.
Where an employee is paid monthly (or annually), notice must be at least one month if the period of service with the same employer is less than five years, and two months for employees who have been employed for more than five years, save where the employment contract provides for a longer notice period or where payment is more regular than monthly and different periods apply.
Termination without notice
Article 61 of the Labour Law entitles an employer to terminate an employee's employment with immediate effect, without notice or the payment of the end-of-service gratuity (EOSG), if the employee commits an act of gross misconduct. Examples include: assuming a false identity or nationality, submitting false documents, committing an act which causes gross financial loss to the employer, disclosure of confidential information and if the employee is found to be intoxicated or under the influence of drugs during working hours.
Fixed term contracts
Where an employee is employed pursuant to a definite or fixed term contract, both the employer and the employee must mutually agree to terminate the contract prior to expiry of the contract term, save for a reason of gross misconduct or termination under Article 51 of the Labour Law (see below). If an employer seeks to terminate the employee's employment and an employee does not agree to the same, the employer may be required to pay the employee his/her wage and other benefits in full for the remainder of the unexpired term.
Article 51 of the Labour Law permits an employee to terminate his/her employment with immediate effect in such instance where the employer has breached the contractual terms, has physically assaulted the employee, has misled the employee, and/or if to continue employment would put the employee in danger and the employer is aware of such danger. In these circumstances, the employee will maintain his/her right to EOSG.
Entitlements upon termination
Upon termination, the employer will be required to pay the employee any and all contractual and statutory sums which are due to the employee, including: notice pay, EOSG, any accrued but untaken leave, any approved but unpaid expenses and any additional sums which may be due under the employment contract.
End of Service Gratuity
Article 54 of the Labour Law provides that in addition to any sums to which the employee is entitled to upon termination or expiry of their employment contract, the employer is obliged to pay EOSG, subject to the employee having completed a minimum of one years of continuous service. An employee is also entitled to be paid EOSG, pro-rata, for fractions of service, i.e. part years in employment.
How is it calculated?
EOSG can be agreed between the parties provided it is not less than three weeks of the employee's final basic salary for each completed year of service. EOSG is usually calculated using calendar days but may be calculated using working days if more appropriate given the particular working practices in a specific industry.
Any periods of valid leave such as sick leave, annual and maternity leave should be included in the calculation. However, any periods of unpaid leave will generally be excluded, but will usually be determined by company policy.
If the employee's period of service with the employer pre-dates the introduction of the Qatar Labour Law (i.e. 6 January 2005), EOSG for the period of employment to 6 January 2005 will be calculated in accordance with the terms of Law No. (3) of 1962, the previous Labour Law. However, note that depending on the identity of the employee, and the sector in which they were working in, they may have been entitled to opt out of EOSG entirely. Such entitlement is not permitted under the current Labour Law.
EOSG v Pension Arrangement
If the employer has in place a retirement scheme or any other similar system that guarantees the employee a gratuity or net privilege at the end of service which is more generous than the statutory compensation calculation for EOSG, the employer is not obliged to pay this compensation in addition to the EOSG.
If the overall net benefit accruing to the employee under the said system is less than EOSG, the employer is required to pay the employee EOSG and return to the employee any sums which the employee may have contributed towards the said system. However, the key practical point is that the employee should be given the option of choosing between the scheme and the EOSG.
Deductions from EOSG
An employer is entitled to deduct from an employee's EOSG any amounts that the employer is owed by the employee. The employer should consult with the employee before any deductions are made, and where possible, reach agreement with the employee regarding the proposed reductions in order to avoid disputes.
Disentitlement to EOSG
An employee loses the right to payment of EOSG if he/she is dismissed for reasons of gross misconduct.
1 Law No.(14) of 2004
Note: Qatari Laws (save for those issued by, eg. QFC to regulate its own business), are issued in Arabic and there are no official translations, therefore for the purposes of drafting this article Clyde & Co LLP has used its own translations and interpreted the same in the context of Qatari laws, regulation and current market practice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.