UAE Labour Law: How to Calculate Gratuity

Gratuity is an integral part of any service for an employee. This is part of the benefits of an employee in the UAE once they leave their job/resign from their employment. Not all employees get gratuity because it is based on the number of years they’ve been employed or if they’ve completed their employment contract.

Also Read: UAE Domestic Worker Law

The gratuity can sometimes become difficult to understand especially if you are new in the UAE. It is quite a complex system of calculation and many employees get confused when it comes to gratuity. Here we bring you several ways to calculate the gratuity that will help you in the long run if you are an employed person.

UAE Labour Law: Gratuity Calculation 2019

We also present you the essential rules regarding the case of gratuity. Keep on reading to know how to calculate the gratuity from your income.

1. If the contract is incomplete
If the employee quits the job before the completion of the contract he made with the company, then he is not eligible for any gratuity. This is the first law to be kept in mind.

2. If the employer terminates the employee
If the company ends the employee during the period of his service then for the service of one to five years, a gratuity of 21 days of salary should be given to the employee. If the employee has worked for over five years with the company, then the additional 30 days’ pay will be given to the employee for the next years.

3. If the service is less than a year
If the service is less than one year, the employee does not qualify to receive any gratuity. Gratuity is given only when the employee completes the duration of service (1 year).

4. If the service is between 1-3 years
If the employee resigns within the duration of one to three years of his work, he or she takes 1/3rd of 21 days of the basic salary for the years of employment he was in.

5. If the service is between 3-5 years
If the employee resigns between three to five years of the job duration, the employee takes 2/3rd of 21 days of the basic salary for the number of years he or she has worked.

6. If the service is more than five years
If the service of the employee is over five years then along with the 21 days basic salary for all the years, he or she gets a 30 days basic salary for the number of years he has worked extra.

7. In the case of death
If the employee dies while in the job the company should pay the end of service gratuity to the beneficiaries of the employee. The company must complete all formalities and give the employee his claim.

It is a rule that the gratuity amount cannot be more than the two years of the total salary of the employee. The gratuity amount must be less than the entire wage earned in 2 years.

We hope you find the tips above useful as it sheds light on some issues you might face when you might need to compute how much gratuity you are going to get after you leave your job.