An employee who has served more than a year is eligible for end of service benefits as per the UAE labor law. The gratuity sum may depend on the type of contract (limited or unlimited), Service period, and the nature of contract closure ( Termination by employer or resignation by the employee).
- The leave days will not be included in calculating service period.
- The gratuity sum is calculated based on the last drawn salary.
- Allowances such as housing, transport, overtime pay, children education allowance,travel allowance and other bonuses will not be included in gratuity calculation.
- If the employee owes any dues or penalty or any money to the company the sum can be deducted from the gratuity by the employer.
- If an employee is terminated due to misconduct he/she is not entitled to end of service benefits as per the UAE labor law.
Gratuity calculation for unlimited employment contract:
Calculation Example :-
Lets assume salary of an employee is AED 10000.
His/Her Daily wage = 10000/30 = 333.33
Wage For 21 days = 333.33 x 21 = 7000 (6999.93) roundoff
Wage For 30 days = 333.33 x 30 =10000.
Gratuity calculation for limited employment contract:-
The total gratuity shall not exceed the wage of two years.
* This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.