Gratuity (مكافأة) in UAE is a big end of service benefit that all employers must pay to their employees. Think of it as a thank you gift for your hard work and dedication! This benefit is mandated by UAE Labour Law and is due after one year of continuous service and is part of your financial security when you change jobs or go back home. While the calculation may seem complicated, DubLoan online gratuity calculator UAE makes it easy, to get your gratuity estimate in seconds according to UAE laws. Calculate Your EOS Now!
Gratuity Calculator (UAE Laws)
Gratuity Calculator UAE 2024
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What is Gratuity in UAE?
Before we get into the numbers, let’s clarify what is gratuity and who is eligible.
What is Gratuity, and who is Eligible?
Gratuity also known as service gratuity is a lump sum payment that employees in UAE receive when their employment labor contract ends. It’s part of the UAE Labour Law to support you financially. Whether you are on a limited-term contract or an unlimited term contract, you are likely eligible for gratuity payments after completing one year of service. However please note that gratuity in UAE is only for expatriate workers. UAE Nationals are not eligible as they receive mandatory National Pension Plans.
Types of Contracts in UAE (limited vs unlimited)
UAE Labour Law recognizes two types of employment contracts: limited and unlimited contract types. The type of contract you have affects your gratuity calculation.
- A limited contract also known as a fixed-term contract or time contract has an end date,
- An unlimited contract also known as an open-ended contract is ongoing and can be terminated by either party with notice.
UAE Labour Law and Gratuity Rules
MOHRE is the governing body for gratuity in UAE. These rules which are the legal basis for gratuity outline eligibility criteria, calculation methods, and payment timelines to ensure all employees are treated fairly. It’s important to know these rules to get your full gratuity entitlements.
Learn Gratuity calculation In one Infographic below.
How to Calculate Gratuity in UAE?
Calculating gratuity may seem complicated but it’s easy once you know the components of gratuity calculation.
- Components of gratuity calculation (salary, contract type, service): Your gratuity is calculated based on your basic pay salary, type of contract (limited or unlimited), and length of service. Additional benefits and allowances are not included.
- Limited contract gratuity formula: For limited contracts, the gratuity is calculated based on 21 days daily wage of your basic salary for each year of service for the first 5 years and 30 days of your basic salary for each year beyond that. So:
- 1-5 Service Years: 21 days of basic salary per year of service.
- More than 5 Service Years: 21 days of basic monthly salary package for the first 5 years and 30 days of basic salary for each year after that.
- Unlimited contract gratuity formula: For unlimited contracts, the calculation depends on whether you resign or are terminated.
Resignation
- Before 1 year: No gratuity.
- 1-3 years: 1/3 of 21 days basic salary for each year of service.
- 3-5 years: 2/3 of 21 days basic salary for each year of service.
- 5 years and above: 21 days of basic salary for the first 5 years and 30 days for each year after.
Based on these rules, you will get a gratuity payment for your duration of service after your resignation.
Termination
- Terminated before 1 year: No gratuity.
- Terminated 1-5 years: 21 days basic pay per year.
- Terminated 5 years and above: 21 days basic pay for the first 5 years and 30 days for each year after.
These are the complete rules for gratuity calculation and above is the gratuity calculation formula.
Using DubLoan Gratuity Calculator UAE
Want to know your gratuity in seconds? That's where a gratuity calculator in the UAE comes in!
- Advantages of using a gratuity calculator: A gratuity calculator, especially an online Gratuity calculator tool, makes the gratuity calculation process easy and gives quick and accurate results based on your details. Saves time and eliminates manual calculation errors, so you get the exact gratuity.
- How to use our calculator? Our online tool Gratuity Calculator UAE (also known as the gratuity computation tool) is easy to use! Just select your contract type (limited or unlimited), and enter your first working day, last working day, and last basic salary. Based on your period of service, Click "Calculate" and our MOHRE Gratuity Calculator UAE will give you the approximate gratuity.
- What to look for in the results? The calculator will show you a clear breakdown of your gratuity, and how much you will get based on your years of service and salary.
Get the Most from Your Gratuity: Tips
Want to get the most from your gratuity? Here’s how:
- Read your contract: Read your contract carefully to understand the contract type and terms related to gratuity, including the calculation and potential deductions.
- Keep track of your service period: Keep accurate records of your employment dates so you get the right gratuity amount. This includes keeping track of your days of absence as this can affect your total service time.
- Negotiate with your employer: In some cases, you can negotiate for a higher gratuity especially if you have a good performance record or have made significant contributions to the company during your service years. Discuss any gratuity concerns with your employer to get clarity and transparency.
Get Your Gratuity Benefits
- Read your contract: Read your contract before you start working in the UAE. Each job and contract has its own rules for end of service benefits including notice period, termination of employment, and gratuity calculation.
- Know your rights in the Emirates: Learn about the UAE Labour Law and its rules on gratuity. This will help you know when you’re eligible for gratuity and when you’re not and your rights in common employment scenarios.
- Keep your Employment Record: Keep track of your employment history including start and end dates, salary, and contract terms. This will help you claim your gratuity when needed and as proof of contract in case of disputes.
- Talk to your Employer: Discuss gratuity concerns or questions with your employer. This will ensure you both are on the same page throughout your employment and can avoid potential disputes in gratuity calculation.
- Seek Legal Advice: If you have disputes or questions on gratuity get help from a labor law expert. This will protect your rights and get your benefits in the UAE. You can also contact the UAE Labour Department for labour complaints and legal advice.
Final Words
Calculating your gratuity in the UAE doesn’t have to be complicated. With the basics of gratuity calculation in mind, our gratuity calculator UAE, and keeping track of your service time, you can estimate your end-of-service benefits and plan your finances with ease.
Keep in mind the factors that affect your gratuity, your basic salary, contract type (limited or unlimited), and service period. If unsure, ask MOHRE or a labour law expert. We hope that you have enjoyed this step-by-step guide.
FAQs about Gratuity in UAE
What if I resign? Will I Get a Gratuity in UAE?
You still get a gratuity if you resign, but the amount may vary based on your service years. The computation after resignation follows the rules in UAE labor law and you will get the service gratuity payment based on those terms.
What if I am terminated?
If your employer terminates your contract, you get gratuity payables, but again, the amount may vary based on the type of termination and your service years.
When is gratuity in UAE paid?
Gratuity is paid as a one-time payment within 14 days of your last working day. This is part of the gratuity calculation and as per UAE Labour Law.
Can my employer take from my gratuity?
In some cases like outstanding loans or damages to the company, your employer can deduct from your gratuity. But this is subject to rules and regulations.
Who is entitled to gratuity in UAE?
Only expat employees are entitled to gratuity in the UAE. UAE Nationals are not entitled to gratuity as they have mandatory National Pension Plans.
Is there a limit for gratuity?
Yes, the total gratuity cannot exceed two years of basic salary. This is to ensure fairness and prevent huge payouts.
What is the gratuity calculation method in UAE?
Gratuity in the UAE is calculated as follows:
- For 1-5 years: 21 days per year
- More than 5 years: 30 days per year
So for employees with 1-5 years of service, the gratuity calculation is 21 days of basic salary per year. For those with more than 5 years of service, it's 30 days of basic salary per year after 5 years.
When can an employer refuse gratuity to an employee?
An employer can refuse gratuity for reasons like misconduct, lack of proper notice or not completing the minimum service period. This is stated in the UAE Labour Law to protect the rights of both employer and employee.
