Gratuity Calculator for UAE
Frequently Asked Questions
Frequently Asked Questions about gratuity and end of service calulations and law's
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How does gratuity calculated Under limited contract?
An employee who has spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service. The days of absence from work without pay shall not be included in the calculation of the period of service and the gratuity shall be calculated as follows:
- If an employee has served for less than 1 year, he is not entitled to any gratuity pay.
- If an employee has served for more than 1 year but less than 5 years, he is entitled to full gratuity pay based on 21 days' salary for each year of work.
- If an employee has served more than 5 years, he is entitled to full gratuity of 30 days' salary for each year of work following the first five years.
- In all cases, the total gratuity shall not exceed the wage of two years.
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How does gratuity calculated Under unlimited contract?
Under unlimited Contract
In the event where the employer terminates an unlimited contract, calculation will be as follows:
- If an employee has served for less than 1 year, he is not entitled to any gratuity pay.
- If an employee has served more than 1 year but less than 5 years, he is entitled to 21 calendar days' basic salary for each year of the first five years of work.
- If an employee has served more than 5 years, he is entitled to 30 calendar days' basic salary for each additional year, provided the entire compensation does not exceed two years' pay.
In the event where the employee under an unlimited contract resigns, calculation will be as follows:
- If an employee resigns before completing 1 year of service, he is not entitled to any gratuity pay.
- If an employee has served between 1 and 3 years, he is entitled to one third (1/3) of 21 days' basic salary as gratuity pay.
- If an employee has served between 3 and 5 years, he is entitled to two-thirds (2/3) of 21 days' basic salary as gratuity pay.
- If an employee has served more than 5 years, he is entitled to full 21 days' basic salary as gratuity pay.
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What is the basis amount that is used to calculate gratuity?
The basis amount used to calculate is the employee’s last drawn basic salary. Any amounts due to the employer may be deducted from the gratuity pay by the employer.
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What is the number of days used to accrue gratuity?
The criteria of calculating the gratuity accrued to an employee is based on a set number of days for each year of service.
Accrual: gratuity accrues at the following rate.
- 21 days per year for the first five years
- 30 days per year from sixth year onwards.
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Who is eligible for gratuity?
The provision of gratuity pay in the UAE is only applicable to expatriate workers. Workers who are UAE nationals are precluded from these provisions. This is because UAE Nationals are eligible for mandatory National pension plans. Expatriate workers do not qualify for UAE pension.
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Does gratuity payable have a limit?
The amount of gratuity payable to an employee during final settlement cannot exceed the employee’s current total two-year salary.
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