Laws & Labor

Gratuity Calculator-UAE

Gratuity Calculator UAE
Gratuity Calculator

Gratuity Calculator

Gratuity Amount:

Use the Above Calculator to get an Approximate Gratuity Amount for your service in UAE.

Understanding the UAE Gratuity Calculation Process

The UAE Ministry of Human Resources and Emiratisation (MoHRE) has outlined specific guidelines to determine the end-of-service gratuity amount for employees. The calculation is based on several factors, including your basic salary and the duration of your service.

To simplify the calculation process, we recommend using the Dubai Development Authority's gratuity calculator. This user-friendly tool allows you to input your start and end dates of employment, as well as your basic salary. By doing so, you can obtain an accurate estimation of your gratuity payment.

Important Considerations and Recent Updates

Before delving into the calculation details, it's essential to be aware of certain aspects that affect your end-of-service gratuity entitlement. These considerations will help you better understand the final amount you are owed.

  1. Unpaid Leave Days: As per the latest update by the UAE Ministry of Human Resources and Emiratisation, unpaid leave days are no longer included in the final calculation of gratuity. Therefore, it's important to exclude these days when determining your entitlement.
  2. Basic Salary vs. Allowances: The gratuity payment is calculated based on your basic salary, which does not include additional allowances such as housing, conveyance, utilities, or furniture. Keep in mind that only the basic salary is considered for the purpose of the gratuity calculation.
  3. Contract Type: The UAE Labour Law differentiates between limited-term and unlimited-term contracts when calculating gratuity. It's crucial to determine your contract type to ensure an accurate calculation.
    • Limited-Term Contract: This type of contract specifies the start and end dates of the employment period. Unless the contract is intentionally renewed, it automatically terminates upon expiration. Project workers typically fall under this category.
    • Unlimited-Term Contract: This type of contract provides more flexibility and is commonly used in the UAE. Unlike limited-term contracts, there is no fixed end date, and the employment relationship continues until either party decides to terminate it.
  4. Resignation and Termination: The circumstances under which you leave your job—whether through resignation or termination—impact the gratuity calculation. We will explore the calculations for both scenarios in detail.

Click on the Limited Term and Unlimited contract Above to read the official Rules and Laws from MoHRE

Calculating Gratuity in Case of Termination

If you find yourself in the unfortunate situation of being terminated, the following calculation method applies to determine your end-of-service gratuity:

  1. Less Than Five Years of Service:
    • For each year of the first five years worked, you are entitled to 21 calendar days' basic salary.
  2. More Than Five Years of Service:
    • Beyond the initial five years, you receive 30 calendar days' basic salary for each additional year.
    • However, please note that unpaid leave days are not considered in the calculation.
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It's important to ensure that the total compensation does not exceed two years' pay.

Make sure you click here for Official MOHRE Gratuity Calculator.

Calculating Gratuity in Case of Resignation

Gratuity pay is an important consideration for employees when resigning from their jobs. It serves as a financial reward for their years of service. However, understanding how gratuity pay is calculated can be complex. In this article, we'll provide a comprehensive listicle guide on calculating gratuity pay on resignation in a simplified manner. Let's dive in!

  1. Less than One Year of Service: If you resign before completing one year of service, unfortunately, you won't be entitled to any gratuity pay. It's essential to consider this factor before making the decision to leave your job early.
  2. One to Three Years of Service: For employees who have served between one and three years, gratuity pay is calculated as 1/3 of 21 days' basic salary for each year worked. This means that for every year of service, you will receive a portion of your monthly salary as gratuity pay.
  3. Three to Five Years of Service: If your tenure falls between three and five years, you are entitled to 2/3 of 21 days' basic salary as gratuity pay for each year worked. This represents an increased percentage compared to the previous category, reflecting your growing loyalty and commitment to the organization.
  4. More than Five Years of Service: Employees who have served for more than five years are eligible for the full 21 days' basic salary as gratuity pay for each year worked. This is the maximum gratuity pay rate, rewarding your long-term dedication to the company.
  5. Exclusion of Unpaid Leave Days: It's important to note that unpaid leave days are not included in the calculation of gratuity pay. Only the actual working days are considered when determining the number of years served for gratuity calculation purposes.

How does gratuity calculated Under limited contract?

In the case of a limited contract, When an employee has completed more than five years of service, they have the right to receive the entire gratuity amount, which is equivalent to 30 days' salary for each year worked beyond the initial five years.

How does gratuity calculated Under unlimited contract?

Gratuity Pay Calculation for Unlimited Contracts in the UAE Under an unlimited contract, employees are eligible for the complete 21-days gratuity pay. To calculate the total gratuity pay, one-third of this amount is granted for service between 1 and 3 years, while two-thirds are provided for service between 3 and 5 years.

What is the basis amount that is used to calculate gratuity?

The calculation is based on the employee's final basic salary. Any outstanding amounts owed to the employer can be deducted from the gratuity pay by the employer.

Who is eligible for gratuity?

The eligibility for gratuity pay in the UAE is limited to expatriate workers, while UAE nationals are excluded from these provisions. This distinction is due to the fact that UAE nationals are covered by mandatory national pension plans, whereas expatriate workers are not eligible for the UAE pension system.

Does gratuity payable have a limit?

The maximum gratuity amount that can be paid to an employee during the final settlement cannot surpass the employee's total salary for a period of two years

How is the end of service calculation for unlimited contract?

The calculation of the end-of-service benefit is determined by dividing the number of working hours specified in the employment contract per year by the number of working hours in a full-time contract per year. The resulting value, when multiplied by 100, represents the percentage on which the end-of-service benefit should be based.

Do I need to pay if I resign under unlimited contract?

When resigning from an unlimited contract, the employee is required to adhere to a notice period. Typically, this notice period ranges from a minimum of 30 calendar days to a maximum of three months. It's important to note that no compensation is provided for early termination in the case of an unlimited contract resignation.

What is the new gratuity law in UAE?

Based on your basic salary (excluding allowances), you will receive a payment equivalent to 21 days of salary for the initial five years of service. If you have been employed by the same company for more than five years, you will receive 30 days' worth of your basic salary for each additional year beyond the initial five.

What is the new labour law for gratuity?

According to the updated Labour Law, all contracts are now considered limited. Therefore, gratuity pay is determined by multiplying 21 days of the employee's basic salary by the number of years of service completed, up to a maximum of five years. After completing five years of service, the gratuity calculation is based on 30 days of the employee's basic salary for each subsequent year of service.

Can gratuity be withheld in UAE?

The payment of end-of-service gratuity is mandatory, and in accordance with the UAE labor law, all employers are legally obligated to fulfill their responsibility of paying the rightful amount to employees who are leaving their employment.


About Author is a news syndication and press release service company based in UAE.

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