Abu Dhabi Judicial Department issues Administrative Circular No. 1 of 2020, clarifying the approach labour courts are required to take, in particular towards the calculation of commission within employment cases.
The circular deals with two topics: with the first dealing with appeals and the second dealing with instances of when commission is to be included in the calculation of basic pay. In this regards the circular states the following:
- The basic principle is that commission is not considered part of basic salary, unless the contract or the articles of association of the employer expressly provides for the same;
- Commission shall be included in the basic salary calculation for the purposes of leave and End of Service Gratuity (ESG) on termination, where the contract or the articles of association of the employer expressly provides for the same;
- Where the employee’s pay is solely commission based, the commission will be considered both basic and gross salary and will be used (or an average) to determine the employee’s entitlements;
- Where the employee can substantiate that the basic salary set out in the contract is false and the employee’s pay is based solely on commission, the commission average will be taken as the basis for calculating any leave entitlement and ESG;
- Where commission is stated in the contract or the articles of association of the employer, or it is established that the employee’s salary is commission based, the average commission paid will be considered when determining the employee’s entitlement to payment in lieu of notice and/or compensation for unfair dismissal;
- Jurisdiction to determine the parties’ intention and agreement with respect to the employee’s salary package, will rest with the Trial Court providing that inference taken will be based on reasonable grounds and must be consistent with the facts detailed in the case papers.
For more information on these articles or any other issues involving labour and employment matters in the United Arab Emirates, please contact Rebecca Ford (Partner) at Clyde&Co at Rebecca.Ford@clydeco.ae or visit www.clydeco.com.