A Comprehensive Guide on How to Determine UAE Gratuity

In the UAE, gratuities are a crucial end-of-service perk for workers. Knowing how to calculate gratuities can help you better manage your finances, whether you are quitting your job or simply making plans for the future. This tutorial will give you an easy-to-use gratuity calculator and explain how to calculate gratuities in the United Arab Emirates.

What is a UAE gratuity?

Depending on the employee's length of service and most recent income, gratuities are lump sum payments made by businesses to departing or resigned workers. Employee gratuity rights are governed by UAE labor law.

What is UAE Gratuity?

UAE gratuity is a type of end-of-service benefit given to employees when they resign or are terminated from their jobs. It is a lump sum payment made by the employer based on the employee’s last drawn basic salary and the total number of years they have worked in the company. The gratuity system is governed by UAE Labor Law, which ensures that employees receive fair compensation for their service.

Legal Aspects of UAE Gratuity

UAE Labor Law provides clear guidelines on gratuity entitlement. It applies to most private-sector employees, whether they are on a limited or unlimited contract. However, government employees and certain job categories, such as domestic helpers and some free zone workers, may have different rules or exemptions.

The gratuity amount is calculated based on the employee’s basic salary, excluding allowances like housing, transport, or other benefits.

Gratuity Calculation in UAE

The gratuity amount depends on the duration of service:

1. If the employee has worked for less than 1 year:
• No gratuity is paid.
2. If the employee has worked for more than 1 year but less than 5 years:
• The employee is entitled to 21 days’ basic salary per year of service.
3. If the employee has worked for 5 years or more:
• The first 5 years are calculated at 21 days’ basic salary per year.
• Any additional years after the 5th year are calculated at 30 days’ basic salary per year.

Who is Eligible for Gratuity in the UAE?

Employees under unlimited or limited contracts who have completed at least one year of continuous service are eligible for gratuity. The calculation varies according to the type of contract and the cause of termination.

How to Calculate Gratuity in the UAE

The amount of the gratuity is determined by the number of years worked and the employee's base pay. Depending on the type of contract, the formula changes:

For Limited Contracts:

• Less than 1 year: No gratuity entitlement.
• 1 to 5 years: 21 days' basic salary per year of service.
• More than 5 years: 21 days' salary for the first 5 years + 30 days' salary for each additional year.

For Unlimited Contracts:

• Less than 1 year: No gratuity entitlement.
• 1 to 3 years: One-third of 21 days’ basic salary per year.
• 3 to 5 years: Two-thirds of 21 days’ basic salary per year.
• More than 5 years: Full 21 days’ salary per year for the first 5 years + 30 days’ salary for each additional year.

Easy UAE Gratuity Calculator

You may obtain a precise estimate right away by using our UAE Gratuity Calculator rather of performing manual calculations. Just enter your years of service and base pay, and our tool will take care of the rest!

Final Thoughts

Knowing how to calculate gratuity in the UAE is crucial for financial planning. By using the UAE Gratuity Calculator on ProWebTools.net, you can ensure that you receive the correct end-of-service benefits.

Try our calculator today and make your gratuity calculation hassle-free!