Gratuity Calculation in UAE – All You Need to Know


Gratuity Calculation in UAE

Every employee working under the companies registered under the Ministry of Labour is bound to enjoy certain rights and privileges by the UAE Labour law. The employees are protected under this ministry while the companies have some responsibilities to fulfill for the welfare of their staff. One of the major clauses in this is the gratuity or the end of service benefits or remuneration.

Often when you have to resign without any notice or terminated you may not be in a position or you may not have the time to calculate your gratuity. Every employee who has one year of service or more is entitled to gratuity. Days of work during which the employee is absent without pay is excluded from the number of days worked.

Here’s what you need to know while calculating your gratuity. This calculation will vary for resignation and termination. It will also be different for employees working under limited contract and unlimited contract.

If an employee has broken the contract due to one or the other reason, the person has no eligibility to claim the gratuity. If the contract has been fulfilled then one can claim twenty one days salary for the number of years worked. For more than five years service, the first part remains the same and then after the fifth year, thirty days salary for each year worked is the calculation.

If the person has a service of more than a year but less than three years, then the gratuity is calculated as one third of twenty one days basic salary for every year of service. If the service is for more than three years but less than five, then the person is entitled to get two-third of twenty-one days’ basic salary for every year worked. For a person with five years of working experience, he/she gets twenty one days salary for every year worked for the first five years and thirty days salary for years worked after that.

If you are terminated with more than one year and less than three, you are eligible for twenty-one days salary for each year worked. The above said rule goes for calculation of gratuity between three to five years too. For employees who have worked for more than five years, the law is same as that of resigning between the same periods. That is, twenty one days salary for every year worked for the first five years and thirty days salary for each year worked after that.

There are other benefits the employee can claim in case of termination. Any paid leave that has not been utilized should be paid. Overtime wages that is due needs to be given as well. A notice period as mentioned in the agreement at the time of employment should be paid. Expenses should be paid in full to the country of domicile of the employee. Any compensation for unreasonable dismissal should also be given.

The maximum gratuity amount should not exceed beyond two years of that employee’s gross salary. Any discrepancies in the calculation or any fraudulence in the payment can be brought to notice to the Ministry of Law directly or through their online portal.