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How to calculate gratuity in the UAE

We will guide you How to calculate gratuity in the UAE ? when you working in UAE then calculating your end-of-service (gratuity) correctly is very important. Once you know how much total you earned through your contract, it will be easy to find any mistakes on your company’s end. According to UAE Labour Law, after completing the one year of service the company should give their employees the gratuity pay. Leaving your current job might not be a good idea. The one-year service time is mandatory otherwise, the employee will not be eligible for gratuity. This includes any unexpected resignation and being terminated by the company for poor performance. There are some other factors on which your gratuity depends. We will be discussing them further.

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How to calculate gratuity in the UAE for Limited and Unlimited Contracts:

Limited Contract Gratuity Calculator

  • Minimum 1 to 5 years of employment. Based on 21 days of salary the employee receives full gratuity.
  • 5 or more years of limited contract employees will be given full gratuity based on 30 days salary for every year.

Example: Your Basic Salary is AED 10,000

  • First Identify your daily wage= 10,000 ÷ 30= 333.30. This means your daily wage is 333.30
  • Now multiply your daily wage by 21 or 30 (depending on your contract type) = 333.30 ÷ 21= 6,999.30
  • So your gratuity will be received in the form of 21 days salary after every year which is 6,999.30
  • People whose contract is more than 5 years will receive a gratuity for each year as long it does not exceed the two-year total sum of salary.

Unlimited Contract Gratuity Calculator

  • Less than 1 year will not be entitled to any gratuity pay.
  • 1 to 3 years of employment. Based on 21 days of salary the employee receives (1/3) of gratuity.
  • 3 to 5 years of employment. Based on 21 days of salary the employee receives (2/3) of gratuity.
  • 5 or more years employees will be given full gratuity based on 21 days.

Example: Your Basic Salary is AED 10,000

  • First Identify your daily wage= 10,000 ÷ 30= 333.30. This means your daily wage is 333.30
  • Now multiply your daily wage by 21 or 30= 333.30 ÷ 21= 6,999.30
  • 1 to 3 years employees get the (1/3) of this figure and 3 to 5 years get the (2/3) of 6,999.30.
  • So your gratuity will be received in the form of 21 days salary after every year which is 6,999.30
  • People whose contract is more than 5 years will receive a full gratuity amount of 6,999.30 for each year if they have spent 5 years or more with the same company.

How to calculate gratuity in the UAE with UAE Gratuity Online Calculator:

How to calculate gratuity in the UAE You can also use the gratuity calculator provided by the UAE Government. Just put your first and last working day and the salary. Click on calculate. If the time duration is 1-year minimum, you will be given the gratuity estimate.

Some Important Factors about Gratuity

Before we jump right into how to calculate gratuity In UAE. There are some factors you should have knowledge about in employment contracts.

  • Types of employment contracts.
  • Total time duration served in the company.

Types of employment contracts

There are two types of employment contracts in UAE, one is a limited or specific employment agreement and the other is unlimited. A limited contract means that there’s a specific date given by the company to work. If an employee resigns or leaves the company unexpectedly during this period then it may result in a loss of labor rights, gratuity and labor ban. Unlimited contracts have no end date and their notice period is two to three months.

Total time duration served in the company

As we have discussed total time duration is necessary in order to be eligible for gratuity. Minimum duration of one year is mandatory and if you leave before that you won’t be receiving any final year settlement or gratuity. We hope, you have learnt How to calculate gratuity in the UAE.

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