Eligibility Criteria for Gratuity
- Employees who have worked continuously for at least one year with the same employer
- Employees whose employment contract is terminated due to reasons such as resignation, retirement, or termination by the employer
- Employees who have a valid employment contract with their employer
- Employees who have not committed any serious misconduct leading to their termination
- Employees who are not covered by a limited-term contract of less than one year
- Both UAE nationals and expats are eligible for gratuity
What factors are considered when calculating gratuity?
The calculation of Gratuity in UAE is calculated based on several factors, including:
Basic salary:The gratuity amount is calculated based on an employee's basic salary, which is paid to the employee, excluding any allowances or bonuses.
Length of service:The years and months employees have worked for their employer are considered while calculating Gratuity. The UAE labor law specifies that an employee is entitled to a gratuity of 21 days of basic salary for each year of service for the first five years and 30 days for each additional year
Reason for termination:The reason for termination of employment can also affect the calculation of Gratuity. A termination due to misconduct can result in the employee not being eligible for Gratuity.
How to Use the Gratuity Calculator
Determine your basic salary: Look at your employment contract or pay slip to find your basic salary amount.
Determine your length of service: Determine the number of years and months you have worked for your employer. For example, if you have worked for 3 years and 8 months, your length of service is 3.8 years.
Enter your basic salary and length of service: Enter your basic salary amount and length of service into the calculator.
Calculate your gratuity: Click on the "calculate" button to calculate your gratuity amount.
Check your results: Based on the UAE labor law, the calculator will display the total gratuity amount you are entitled to.
How to calculate gratuity for limited contract in UAE:
Duration of Service: 1 year
If you leave work before one year, according to the law, you are not entitled to any gratuity pay or final settlement
Duration of Service: 1 – 5 years
Example:
Basic Salary: AED 5,000
Total Years of Working: 2 years
Formulae: Basic Salary * 12(Number of months in a year)/365(Total Number of days) * 21 * 2 (Work Duration)
Note : The above calculation is just an example; the numbers might differ basis on each company contract signed between the employee and employer
Duration of Service: +5 years
EOSB per year greater than 5 years and above *(Basic Salary)
Key aspects to consider regarding Gratuity:
- The Gratuity amount is calculated based only on the employee's basic salary.
- Ensuring that the employer does not manipulate the basic salary by increasing other expenses is important.
- If an employee is eligible for Gratuity, any money they owe to the company can be compensated using the Gratuity amount.
- Employees with less than 1 year of experience in the company are not entitled to Gratuity.
- An employer can disqualify an employee from receiving Gratuity if they fail to perform their primary duties.
- Employees who cause material damage or loss will not be eligible for Gratuity.
Disclaimer:
Please note that the Gratuity Calculator provided is solely meant for guidance and has no legal basis. The results generated by this calculator are based on the most commonly occurring employment circumstances under UAE Labor Laws. It is essential to understand that only the gratuity component of final settlements is included in the calculator, and factors such as unused leave salary, notice compensation, air ticket, etc., are not considered. We recommend seeking professional advice for a detailed interpretation and/or dispute regarding gratuity/end-of-service benefit (EOSB). Dr. Job FZ LLC. does not take responsibility for any errors or missions.
