GRATUITY CALCULATOR

Contact Type

Circumstances

Your Basic salary
No. of Years in Service
Your approximate gratuity amount is : 5000 AED

What is Gratuity ?

Gratuity is provided to the employee for the services provided to the company. It is an end of service benefit that is offered when an employee works in the company for more than a year. It is considered as an important part of the salary. The end of service gratuity amount provided depends on the employee’s monthly basic salary. Usually, it is provided during retirement but it can be availed even before that and it totally depends on the terms and conditions of the organization.

Eligibility Criteria for Gratuity

  • The employee must be working in the company for more than a year
  • The employee must provide continuous services in the organization for more than a year
  • The employee must be resigning by himself
  • If an employee is leaving the organization before the end of the contract then he is not eligible
  • Both UAE nationals and expats are eligible

How to calculate Gratuity?

It is important for every employee to understand how is the gratuity provided and on what basis. The gratuity provided depends on the employment contract type i.e Limited contract and Unlimited contract.

Limited contract: If an employee agrees to work in the company for a particular time period then it is a limited contract. This contract can be extended or terminated on mutual understanding.

Unlimited contract: If an employee works in a company without any end date, it comes under Unlimited contract type.

Gratuity calculation for a Limited Contract-
Here the number of years an employee worked in an organization should be considered.

  • If an employee worked for 1-5 years then 21 days is considered to calculate gratuity
  • If an employee worked for more than 5 years then 30 days is considered to calculate gratuity

Procedure

  • Calculate your daily wage
  • Multiply it with 21 or 30(depending on the work experience in that company)
  • Multiply it with the total number of service in that company

Let’s assume your basic salary is AED 25,000 and worked in the company for 4 years

  • Daily wage: 25000/30= 833.33
  • Multiply it with 21(as the total work period is less than 5 years): 833.33*21= 17,499.33
  • Multiply with 4(total work time in the company): 17499*4 = 69999

The gratuity that would be provided at the end of the service i.e. 4 years(Limited contract) is AED 69999.

Gratuity calculation for an Unlimited Contract-

  • If an employee has worked for 1-3 yrs in the company, ⅓ of 21 days salary is considered each year and calculated.
  • If an employee has worked for 3-5 yrs in the company, ⅔ of 21 days salary is considered each year and calculated.
  • If an employee has worked for more than 5 yrs in the company, 30 days salary is considered each year and calculated.

Procedure

  • Calculate your daily wage
  • Multiply it with 21 or 30(depending on the work experience in that company)
  • Consider only ⅓ rd or ⅔ rd of the result(depending on the work time)
  • Multiply it with the total number of service in that company

Example:
Let’s assume your basic salary is AED 25,000 and worked in the company for 4 years

  • Daily wage: 25000/30= 833.33
  • Multiply it with 21(as the total work period is less than 5 years): 833.33*21= 17,499.33
  • Considering ⅔ rd of the result(as work experience is 4 years): ⅔ of 17499 = 11666
  • Multiply with 4(total work time in the company): 11666*4 = 46664

The gratuity that would be provided at the end of the service i.e. 4 years(Unlimited contract) is AED 46664.

Points to be noted about Gratuity

  • Gratuity is calculated on considering basic salary only
  • Make sure your employer doesn’t manipulate your basic salary by increasing other expenses
  • If an employee has to pay any money to the company, then it can be compensated with the gratuity if he eligible for it
  • An employee with less than 1-year experience in the company is not eligible for gratuity
  • An employer has the right to disqualify an employee for gratuity if he fails to perform his basic activities
  • If an employee causes any material damage or loss then he will not be eligible for gratuity

Frequently Asked Questions

Q. Are expats eligible for end of service benefits?

A. Expats are eligible for gratuity at the end of service benefits but not eligible for a pension.

Q. If an employee is terminated by the organization, then will he be eligible for gratuity?

A. If an employee violates any of the company rules then he can be terminated by the organization and will not be eligible for gratuity.

Q. Is there any limit in the gratuity amount provided?

A. The maximum gratuity provided should not exceed 2 years salary of the employee.

Q. If an employee is terminated without any complaints then will he be eligible for gratuity?

A. If an employee is terminated without any complaints then he is eligible for gratuity and should be calculated for 30 days.

Q. If an employee is dead or physically or mentally disabled, then will he be provided gratuity?

A. Yes. If an employee who worked for more than a year in an organization and is dead or physically or mentally disabled then he is eligible for gratuity.

Q. Should we add the absence of work as well while calculating gratuity?

A. If the days of absence are without pay then they will not be included in the gratuity.

Q. In the case of death of the employee, to whom the gratuity must be provided?

A. In the case of death of the employee, the gratuity will be provided to the beneficiary.

Q. Are employees who work in a company for 3 years with a break of 6 months in between eligible for gratuity?

A. No. Continuous work service for more than a year at a company is required to be eligible for gratuity.

Q. I must give some money to my employer. Can that be compensated with the gratuity?

A. Yes. If the employee needs to give money to the employer then it can be compensated with the gratuity amount if he is eligible.

Q. Are non-residents eligible for gratuity in UAE?

A. UAE residents who are working in UAE are eligible for gratuity in UAE.