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How to calculate Gratuity in UAE

gratuity in uae

Gratuity is considered one of the components of salary. It is rewarded to the employees who have worked in an organization for more than a year continuously. Usually, it is provided at the end of service in that particular company. Gratuity in UAE is offered at most of the companies.

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Types of Employment Contract

There are 2 types of contract that is usually followed by every organization. Limited Contract and Unlimited Contract.

Limited Contract– This is when an employee signs an agreement to stay at the company for a particular time. Both the parties are allowed to terminate the contract or extend it on mutual understanding.

Unlimited Contract– Under this no particular time period is provided. On mutual agreement, an employee can offer his services for how much ever time he wants to.   

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How to compute Gratuity in UAE?

Calculation of gratuity in the UAE is quite simple.

For Limited Contract

Gratuity computation in UAE for limited contract

Let the basic salary be AED 15000 and an employee has worked for 3 yrs in the company.

Therefore, you would get a gratuity of AED 31500.

For Unlimited Contract

Gratuity computation in UAE for unlimited contract

Let the basic salary be AED 15000 and an employee has worked for 3 yrs in the company.

Therefore, you would get a gratuity of AED 21000.

Points to be noted while calculating gratuity in UAE:

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What can make you ineligible for gratuity?

There are certain things that can make you lose your end of service gratuity. Like,

UAE Labour Law

According to the UAE Labour Law, an employee who has worked for an employer more than a year are subjected to gratuity irrespective of the contract type. The gratuity varies from each employee depending on the salary and the contract type.

*The values provided are for reference purpose only. Visit UAE Pensions and End of Services benefits for details*

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