{"id":4019,"date":"2018-10-10T12:51:57","date_gmt":"2018-10-10T12:51:57","guid":{"rendered":"http:\/\/139.59.38.172:8081\/?p=4019"},"modified":"2019-09-25T13:57:17","modified_gmt":"2019-09-25T13:57:17","slug":"how-to-calculate-gratuity-in-uae","status":"publish","type":"post","link":"https:\/\/www.mymoneysouq.com\/financial-blog\/how-to-calculate-gratuity-in-uae\/","title":{"rendered":"How to calculate Gratuity in UAE"},"content":{"rendered":"<p>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.<\/p>\n<p><strong>Check: Different <a href=\"https:\/\/www.mymoneysouq.com\/loans\/compare-personal-loans-uae\" target=\"_blank\" rel=\"noopener noreferrer\">Personal loans in UAE<\/a><\/strong><\/p>\n<h3><span style=\"font-weight: 400;\"><strong>Types of Employment Contract<\/strong><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">There are 2 types of contract that is usually followed by every organization. Limited Contract and Unlimited Contract. <\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Limited Contract<\/strong>&#8211; 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. <\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Unlimited Contract<\/strong>&#8211; 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. &nbsp;&nbsp;<\/span><\/p>\n<p><strong>Maybe interested:&nbsp;<a href=\"https:\/\/www.mymoneysouq.com\/financial-blog\/bounced-cheque-in-uae-dubai-what-you-need-to-know\/\" target=\"_blank\" rel=\"noopener noreferrer\">Bounced cheque in UAE &amp; Dubai \u2013 What you need to know?<\/a><\/strong><\/p>\n<h2><strong>How to compute Gratuity in UAE?<\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">Calculation of gratuity in the UAE is quite simple. <\/span><\/p>\n<h4><span style=\"font-weight: 400;\"><strong>For Limited Contract<\/strong>&#8211; <\/span><\/h4>\n<ul>\n<li><span style=\"font-weight: 400;\">If an employee has worked for 1-5yrs in the company, 21 days salary is considered each year and calculated. &nbsp;&nbsp;<\/span><\/li>\n<li><span style=\"font-weight: 400;\">If an employee has worked for more than 5 yrs in the company, 30 days salary is considered each year and calculated.<\/span><\/li>\n<\/ul>\n<p><strong>Gratuity computation in UAE for limited contract<\/strong><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Calculate per day wage according to the service in the company<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Multiply it with 21 or 30(depending on total service) and the result will be your annual gratuity<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Multiply it with the number of years worked in the company<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Let the basic salary be AED 15000 and an employee has worked for 3 yrs in the company. <\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Calculate daily wage: 15000\/30 = 500<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Multiply with 21(as worked for less than 5 yrs): 500*21 = 10500<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Multiply it with the number of years worked in the organization: 10500*3 = 31500<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\"> Therefore, you would get a gratuity of AED 31500. <\/span><\/p>\n<h4><span style=\"font-weight: 400;\"><strong>For Unlimited Contract<\/strong>&#8211; <\/span><\/h4>\n<ul>\n<li><span style=\"font-weight: 400;\">If an employee has worked for 1-3 yrs in the company, \u2153 of 21 days salary is considered each year and calculated. &nbsp;&nbsp;<\/span><\/li>\n<li><span style=\"font-weight: 400;\">If an employee has worked for 3-5 yrs in the company, \u2154 of 21 days salary is considered each year and calculated. <\/span><\/li>\n<li><span style=\"font-weight: 400;\">If an employee has worked for more than 5 yrs in the company, 30 days salary is considered each year and calculated. <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Gratuity calculation in UAE in case of resignation is different from termination. If an employee is terminated from the organization with no complaints then 30 days salary is considered each year and calculated. <\/span><\/li>\n<\/ul>\n<p><strong>Gratuity computation in UAE for unlimited contract<\/strong><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Calculate per day wage according to the service offered in the company<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Multiply it with 21 or 30(depending on total service) and the result will be your annual gratuity<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Take \u2153 or \u2154 of the result(depending on the tenure) <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Multiply it with the number of years worked in the company<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Let the basic salary be AED 15000 and an employee has worked for 3 yrs in the company. <\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Calculate daily wage: 15000\/30 = 500<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Multiply with 21(as worked for less than 5 yrs): 500*21 = 10500<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Take \u2154 of the annual gratuity calculated: \u2154*10500 = 7000<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Multiply it with the number of years worked in the organization: 7000*3 = 21000<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\"> Therefore, you would get a gratuity of AED 21000. <\/span><\/p>\n<h2><span style=\"font-weight: 400;\"><strong>Points to be noted while calculating gratuity in UAE<\/strong>:<\/span><\/h2>\n<ul>\n<li><span style=\"font-weight: 400;\">An employee who has worked for less than 1 yr in an organization is not eligible for gratuity<\/span><\/li>\n<li><span style=\"font-weight: 400;\">According to the UAE Labour Law- Article 132, gratuity provided will not be more than 2 years salary<\/span><\/li>\n<li><span style=\"font-weight: 400;\">According to the UAE Labour Law- Article 134, only basic salary will be considered while computing gratuity. Food, transport and other allowances are not added <\/span><\/li>\n<li><span style=\"font-weight: 400;\">From UAE Labour Law- Article 135, if an employee loaned from the organization, then the employer can deduct that amount from the gratuity <\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Expats are eligible for gratuity but not pension<\/span><\/li>\n<\/ul>\n<p><strong>Maybe interested:&nbsp;<a href=\"https:\/\/www.mymoneysouq.com\/financial-blog\/best-credit-cards-to-get-airport-lounge-access-in-dubai\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Credit Cards to get Airport Lounge Access in Dubai<\/a><\/strong><\/p>\n<h2><strong>What can make you ineligible for gratuity? <\/strong><\/h2>\n<p><span style=\"font-weight: 400;\">There are certain things that can make you lose your end of service gratuity. Like, <\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Under the limited contract, if a worker leaves the organization before the contract ends, then he will not be eligible for gratuity unless he has served the company for more than 5 years.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">If he leaves the company without any prior notice <\/span><\/li>\n<li><span style=\"font-weight: 400;\">On submitting fake documents to the organization <\/span><\/li>\n<li><span style=\"font-weight: 400;\">If the worker causes any material loss\/damage to the organization<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">If the worker fails in performing his basic duties at the organization<\/span><\/li>\n<\/ul>\n<h2><strong>UAE Labour Law <\/strong><\/h2>\n<p>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.<\/p>\n<p><span style=\"font-weight: 400;\">*<\/span><i><span style=\"font-weight: 400;\">The values provided are for reference purpose only. Visit <\/span><\/i><a href=\"https:\/\/government.ae\/en\/information-and-services\/jobs\/working-in-uae-government-sector\/pensions-and-end-of-service-benefits\" target=\"blanck\" rel=\"nofollow\"><i><span style=\"font-weight: 400;\">UAE Pensions and End of Services benefits<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> for details*<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>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. Check: Different Personal loans in [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":4027,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,6],"tags":[],"class_list":{"0":"post-4019","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-featured","8":"category-general"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to calculate Gratuity in UAE - MyMoneySouq Financial Blog<\/title>\n<meta name=\"description\" content=\"Gratuity in UAE is offered at most of the companies. 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