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Calculations for gratuity pay

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.

 

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. 

BASIC SALARY: Enter only basic salary . do not include house rent, travel and other allowances . Please check your Contract

CONTRACT TYPE: Normally 2 year contract is limited

DATE OF JOINING : Joining date as per the contract

Downlaod UAE Labour laws PDF

No. Description Size Download
1
Title One (Definitions and General Provisions)
125KB Download
2
Title Two (Employment of Workers and Youth and Women Labour)
72KB Download
3
Title Three (Employment Contracts, Records and Wages)
78KB Download
4
Title Four (Working Hours and Leaves)
74KB Download
5
Title Five (Safety, Protection Health and Social Care Of Workers)
48KB Download
6
Title Six (Disciplinary Rules)
48KB Download
7
Title Seven (Termination of Employment Contract and End of Service Gratuity)
72KB Download
8
Title Eight (Compensations for Occupational Injuries and Diseases)
65KB Download
9
Title Nine (Collective Labor Disputes)
49KB Download
10
Title Ten (Labor Inspection)
65KB Download
10
Title Eleven (Sanctions)
65KB Download
10
Title Twelve (Final Provisions)
65KB Download