HOW TO CALCULATE YOUR END OF SERVICE GRATUITY IN THE UAE

The MoHRE has revealed a revised UAE gratuity calculating procedure.

The guidelines for end-of-service gratuity have been revised.

However, the calculation is still simple and easy. To determine your payout in accordance with UAE labor legislation, the Dubai Development Authority developed a gratuity calculator that asks for your start and end dates as well as your basic salary.

The UAE Ministry of Human Resources and Emiratisation (MoHRE) essentially announced that unpaid leave days would not be factored into the final gratuity computation.

Everything you should know about gratuity in the UAE

For the first five years of employment, you will be paid a 21-day paycheck based on your basic income (before allowances are tacked on).

For every additional year after the first five, employees who have been with the same employer for more than five years receive 30 days' worth of their basic pay.

Having said that, days of unpaid leave will be deducted from this final number after this week's report.

The final basic wage to which you are entitled serves as the basis for calculating the end-of-service gratuity. It won't include perks like housing, transportation, utilities, furniture, etc.

First step: Identifying your contract type

The UAE Labour Law states that they consider two different sorts of contracts when figuring out your gratuity.

• Limited-term contract
• Unlimited term contract

Generally, the beginning and ending dates of the working time are included in limited-term contracts. The contract shall automatically terminate upon its expiration unless expressly renewed. Consider the project workers who quit their jobs once the work is done. The most typical contract in the UAE is an unlimited-term contract because it is more flexible.

When won't I receive a gratuity?

Employees are not eligible for gratuity pay if they leave their jobs voluntarily before putting in a complete year of service.

If you are terminated

The calculation will look somewhat like this if you are unfortunate enough to be fired:

For each year of your first five years of employment, even if you have worked for longer than a year but fewer than five, you are entitled to 21 calendar days' worth of basic pay.

If an employee has worked more than five years, they are eligible for 30 calendar days of basic pay for every year they worked past five, as long as the total compensation does not equal more than two years' pay.

Your unpaid leave days will not be included.

If you choose to resign

In the event that you resign, the calculation will be as follows:

Again, if you resign before completing one year of service, you are not entitled to any gratuity pay.

If you have served between one and three years, you are entitled to 1/3 of 21 days’ basic salary as gratuity pay.

Employees who have served between three and five years are entitled to 2/3 of 21 days’ basic salary as gratuity pay.

If you have served more than five years, then you are entitled to the full 21 days’ basic salary as gratuity pay.

Your unpaid leave days will not be included.