Gratuity is a financial benefit employers provide to employees when they leave a job after a certain period of service. It recognizes long-term commitment and is a legal right for employees in the UAE. Understanding gratuity rules can help you plan your financial future and ensure you receive what you’re entitled to.
Who is Eligible for Gratuity in the UAE?
- Minimum Service Period: Employees must complete at least one year of continuous service with the same employer.
- Contract Type: Both limited and unlimited contract employees are eligible, but calculation methods differ.
How to Calculate Gratuity in the UAE
Gratuity calculations depend on your basic salary and the length of your service. The formulas differ based on contract type.
Gratuity Calculation Formulas
| Contract Type | Formula |
|---|---|
| Limited Contracts | (Basic Salary ÷ 26) × Number of Days Worked |
| Unlimited Contracts | (21 ÷ 26) × Basic Salary × Years Worked |
Manual Calculation Steps
- Know your basic salary (excluding allowances like housing or bonuses).
- Calculate your service period (total days or years worked).
- Determine your contract type (limited or unlimited).
- Check the reason for leaving (resignation or termination).
Accurate UAE Gratuity Calculator
Basic Salary (AED):
Service Period (Years):
Contract Type:
Crucial Factors for Gratuity Calculation
- Contract Type: Limited contracts differ from unlimited contracts.
- End of Employment Type: Resignation may result in lower gratuity compared to termination.
- Service Duration: Longer service results in higher gratuity.
- Basic Salary: Ensure the correct basic salary is used.
FAQs About Gratuity in the UAE
1. Who is eligible for gratuity in the UAE?
Employees who complete at least one year of continuous service with the same employer are eligible.
2. Is gratuity calculated on the basic salary?
Yes, gratuity is calculated only on the basic salary, excluding allowances and bonuses.
3. Can gratuity be denied?
Gratuity can be denied if an employee is dismissed for serious misconduct as defined under UAE Labor Law.
4. How many years do I need to work for full gratuity?
Full gratuity is typically granted after completing five years of service under unlimited contracts.
Conclusion
Gratuity is a crucial employment benefit in the UAE, offering financial security for employees leaving their jobs. By understanding the eligibility criteria, calculation methods, and labor laws, you can ensure accurate payments and avoid common mistakes. Use online calculators or manual methods to determine your gratuity and stay informed about your rights under UAE labor laws.
Official Reference: For more details, visit the Ministry of Human Resources and Emiratisation (MOHRE) website.