Gratuity calculation UAE Labour Law
I have previously written about Gratuity calculation under UAE Labour Law. There were few confusions and clarifications sought. I was continuously speaking with HR professionals here in UAE and I have arrived on How to calculate Gratuity or End of Service Benefit under UAE Labour Law?
Below is the paragraph from UAE Labour Law:
Article 137: Where a worker under an indefinite term contract abandons his work at his own initiative after a continuous service of not less than one year and not more than three years, he shall be entitled to one-third of the severance pay provided for in the preceding article. Such a worker shall be entitled to two thirds of the said severance pay if his continuous service exceeds three years up to five years, and to the full severance pay if it exceeds five years.
Gratuity is always calculated on the basis of the last drawn Basic Salary during your time of termination or resignation. An employee shall be entitled to Gratuity at 21 days of Basic Salary for each year of his/her service.
Gratuity calculation UAE Labour Law 2012 in case of Resignation:
1. Gratuity Calculation UAE Labour Law: Within one year- No Gratuity
2. Gratuity Calculation UAE Labour Law: More than one year but less than 3 years: 1/3rd of 21 days basic salary each year of service.
Below are details with example:
Example:
- Basic salary = AED 10,000 per month
- Joining date = 01-01-2010
- End date = 31-03-2011
- Total number of days worked = 455 days
- Total number of years worked = 1.25 years
- 21 days’ Basic salary = AED 6904.1
- Wages per day = AED 10,000*12/365= 328.76
- Amount: 21*328.76*1.25 = 8,606.49
- Gratuity Amount: 1/3*8606.49 = 2,868.83
3. Gratuity calculation UAE labour law for More than 3 years but less than 5 years: 2/3rd of 21 days basic salary each year of his/her service.
Below are details with example:
- Basic salary = AED 10,000 per month
- Joining date = 01-01-2008
- End date = 31-03-2011
- Total number of days worked = 1,186 days
- Total number of years worked = 3.25 years
- 21 days’ Basic salary = AED 6904.1
- Wages per day = AED 10,000*12/365= 328.76
- Amount: 21*328.76*3.25 = 22,433
- Gratuity Amount: 2/3*22,433 = 14,955.75
4. Gratuity Calculation UAE Labour law: More than 5 years
- Basic salary = AED 10,000 per month
- Joining date = 01-01-2005
- End date = 31-03-2011
- Total number of days worked (31-03-2011-01-01-2005+1)=
1916 days - Total number of years he worked=1916/365= 5.25
- 21 days’ Basic salary = 328.76*21= AED 6,904.1
- 30 days basic salary=328.76*30= AED 9,863.01
- Wages per day = AED 10,000*12/365= 328.76
- Total gratuity=21*328.76*5=34,520.55+
(1,916/365-5)*30*328.76=2,459. 00=36,979.5
Gratuity calculation UAE labour law in case of Termination:
1. Within a year – No Gratuity
2. More than a year but less than 5 years: 21 days of Basic Salary for every year of service.
3. More than 5 years: 21 days’ basic salary for upto 5 years plus remaining years*30 days’ basic salary *per day wage.
Article 138
Where a worker under a definite term contract abandons his employment at his own initiative before the expiry of his contract period, he shall not be entitled to severance pay unless his continuous period of service exceeds five years.
Disclaimer: The above Gratuity calculation UAE labour law is to be used as a guidance and is not be taken as final calculation. The UAE Labour Law is dynamic and is subject to change. Please take care while calculation by contacting the Ministry of Labour. I am in no way responsible for your actions. This calculation is for personal use and comfort.
I am in the process of creating an Excel with the above calculations to help Gratuity calculation UAE labour law.
Allison
Dec 08. 2012
Hi Deepak,
I will complete my 2 years contract this Feb 2013. I just want to inquire how much will my gratuity if my salary is AED 4000/mo. I am having a limited contract.
Best Regards,
ALI
Deepak M
Dec 18. 2012
Your gratuity will be almost 5.5k
Deepak M
Jan 10. 2013
Almost 5.5K
Anees
Nov 27. 2012
HI Mr.Deepak,
I’ve joined the company on 03-07-2006 & decided to resign on 15-07-2013, my overall salary is 6500/- BUT my basic salary is 2835.
pls advise, what will be my gratuity.
Deepak M
Dec 08. 2012
It is almost 16K
Deepak M
Jan 10. 2013
Almost 16K
tess serrano
Nov 26. 2012
this coming may 03 2013 my contract visa is finish….i will not continue my contract again…i just want to know if i have graduity fee to my employeer?.my salary is 1200 only i working saloon….my question is i have a graduity fee?and how much?please i want to know thank u.
Efren
Nov 26. 2012
Dear Adviser,
i would like to have more information regarding to my termination.
1. my company contract is unlimited
2. Date of Joining is jan 2,2006
3. Date Terminated is nov. 11,2012
4. Reason for termination is Due to company restructure.
5. i have one month notice to leave my work.
6. after 3days of receive the termination letter, i have receive advice / call to HR that i do not need any more to come at the factory and it is automaticaly counted as per the one month notice, and wait for the last day mention from the letter. and come back after one week before for clearance and settlement of due.
i was surprise for immediate termination, with out any first warning letter. i could not even depend my self.
i do not have any choice to sign the photo copy of the termination letter.
Could you please tel me what is the calculation of my graduity.
1. My Basic Salary is 6,000aed
2. Others Allowance is 2,000aed
3.Housing Allowance is 2,000aed
4.and i am intitled for yearly ticket 2way
5.vacation leave – i went for vacation last june to july. 2012 =32days.
6. can i avail the 3 months pay for the employer termination of contract , my end contrat ends at 16,03,2014.
7. i am employed 6years and 12months.
8. Do i have Grace period of one month after cancelation of visa or after completing the one month notice. dec. 10,2012
Thank you very and i appriciate the advice.
Efren (Pilipino)
jhen
Nov 25. 2012
hi sir,
I’m from unlimited contract, I resigned to my old company due to health problem my salary is 2200, joining the company almost 9months while waiting of my cancellation documents i find a new job, can tell me what will i do? because my old company saying that they will escort me at airport before they can give my documents.
felix ladesa
Nov 25. 2012
Gd’mrning sir deepak,i am working 6 year on my company and i will decide myself to not renew my visa this coming feb 17 my basic is only 900 dhs…how much total gratuiy will i get…
sagadevan
Nov 24. 2012
sir, my visa is unlimited visa. for me basic salary is 1500AED now my contract period is 3 year over.my visa is 3 year. my company told only 7 days per year graduvity this is possible or not please reply me sir
Cha
Nov 24. 2012
I have unlimited contract in our company and my salary was 2000aed I resign and finish my notice period last november 16, 2012.how much will I get all in all from my company because they are telling that I will not receive single money in that company because they will deduct the expenses of my visa.i started March 2011 until November 16, 2012. And the company will give me a bond.
Deepak M
Nov 25. 2012
company cannot deduct any visa expenses from employees unless mentioned in the contract
Brenda
Nov 21. 2012
Hi Sir Deepak:
For me can u check approximate EOS amout, basic salary at 10000, ive been working for 1 1/2 year already, and does the annual leave ticket amount is included in calculating the EOS as well? how about i have still 20 days unused leave, does it also be in the computation?
Thanks for your reply.
Brenda
Deepak M
Nov 22. 2012
if it is a resignation gratuity will be almost 3,500 plus what ever unused leave amount. If it is a resignation annual ticket fare will not be included.
Arif Khan
Nov 21. 2012
Hi Mr. Deepak,
Im calculating one of employees gartuity. Can you please guide me in this regard.
He ha s worked for 27 year during this time he has taken 57 months leave. His current salary is 4500. His current contarct is limited. and he has resigned with almost a month before his contract expired.
I would like to know the formula and the difference of resigned and termination formulas. I would be very grateful.
robert
Nov 19. 2012
hello sir,I had been working in an organisation for last 2 years & 10 months.when they are counting my Gratuity they are telling me tht,they will not take the 10 months in counting & they will pay for only 2 yrs..pls help me in this situation..
Deepak M
Nov 20. 2012
the gratuity will be calculated till your last working day. they have to consider 10 months
robert
Nov 20. 2012
Sir,thankx for u r kind reply.
I had joined in 31/1/2010 with a basic salary of 1100 AED and my last working day will be till 25/11/12 ,so totally 2 yrs 10 months.So ,How much will be am getting as my Gratuity amount.. Thank You..
Deepak M
Nov 22. 2012
if your terminated your gratuity will be approximate 2k or if you are resigned it will be approximate 700AED.
john
Nov 19. 2012
Hi Deepak,
I Joined My company on July/2010 with basic salary 1500,My current salary is 2000. ,i have give resignation to my company (resign date-30th nov 12).My contract is unlimited,Shall i get any gratuity ?How Much?
Deepak M
Nov 20. 2012
yes you are entitled for gratuity and amount will be approximate 850AED
Joan
Nov 17. 2012
Hi Deepak,
I have been working with my company for 4.5 years on a salary of 10k, I want to know whether the 5months count for anything?
Appreciate your response
govinda
Nov 16. 2012
if some one is working in a certain company , what happens when employe do not want to resign but he /she wants to finish current visa and do not wants to renew visa . so is it compulsory to resign ?or if employe do not resign , is there any benefits for the employee?and why most of the company they say to there employee to resign if they donot wants to renew is there any benefits for the company if they do so?
Marie
Nov 15. 2012
Dear Sir,
I am looking forward for most reliable advise. My husband is an architect in one of known company in UAE. He is working in the company from June 28,2008 till date (2012) and the company is now in unstable condition. My question is if my husband will not continue or the company will not renew his visa how much gratuity he can receive from the company? His basic salary is AED3500. In addition, his visa is limited, what are the consequences, we may face in Labor & immigration. Furthermore, im in husband visa as well working in another company.
Your advise will be helpful.
Thanks,
hi
Nov 15. 2012
hi
brother i am doing work in one company on unlimited agreement from last two months and i have 6 month probationary period if i want to resign tell me about bane conditions it will apply or not and effects of that.
Deepak M
Nov 18. 2012
if your visa is stamped then you will have a ban
Jesch
Nov 10. 2012
hi deepak..
My limited contract will expire on feb.2013. I worked in the company for exact 5 yrs. I want to know how much will be my gratuity? My salary is AED3500 but my basic salary in the labor contract is only AED1500.
Awaitng your earliest response in this regards…
Thanks.
Deepak M
Nov 11. 2012
If your current BASIC SALARY IS 3,500 AED then your gratuity will be almost 12k.
govinda
Nov 08. 2012
hi deepak sir goodmorning
there are so many companies which are giving the gratiuity and final settlement amount after entering the airoprt and even they donot let people to know the full and final settlement when they finish cancellation ,so what a person can do if company cheat and the amount is less then the actual amount to get by rigths what may be the process for such condition can you please suggest me .thanks for ur hepl.
Deepak M
Nov 08. 2012
You should receive your dues before signing the cancellation paper as it mentioned in the cancellation paper that you have received your full and final settlement.
myra
Nov 06. 2012
i just want to inquire about gratuity in my case … i’ve been working for 7 yrs. and until now my basic salary in my contract is still 1,000 but im getting 3,000 for more that 3 yrs..so is my gratuity wud still be base on my basic contract?
Deepak M
Nov 07. 2012
The gratuity is always be calculated on the current drawn basic salary.
fazliraziq
Nov 05. 2012
Hello good am sir m working in a compny i coplete 6 yesrs i want to canceled my visa my basic salery is 2000 how much i will get as graduaty m working in abudhabi
Bryan
Nov 04. 2012
I actually resigned and serving 30 days notice as i was trying for 15 days notice the hr told me that i wont be able to get my gratuity if i cant served the 30 days notice. My question is, can i leave the company earlier even though i have already taken my leave balance? Is it true that my gratuity will not be given to me? Thanks.
govinda
Oct 31. 2012
sir deepak, goodmorning. i am working in a company from 15/11/2009 and and my last working day is 15nov.2012.which complete my three years of service ,my basic salary is 2000basic .so please can you tell me how much i have to get my gratuity .thanks for help
Deepak M
Nov 01. 2012
if it is termination it will be nearly 4K or if it resignation it will be 2,700 AED.
Deepak M
Nov 08. 2012
The total amount will be Approximate AED 4,000/- but if you resign it will be AED 1,300/- approximate
Sara Alvero
Oct 24. 2012
I want to ask an advice about my case in my old company,i have work their for more than 4 years (August 26,2008-October 15,2012) . I finished my contract ,they applied my visa under the new name of the company but the same management. Now I resigned in the company,I only have 8 months under the new visa and new name of the company.
My question is,how much should i receive if I have 1700 basic salary for my finished contract and if they have the right to deduct all the expenses for the application of my new visa and if so how much it will be?
Soni Harsh
Oct 24. 2012
Hello Deepak,
Appreciate for your reply. I have been working in a company apprx. 8 years in abu dhabi. I have got a one month notice (release notice). I understand release notice is nothing but some twisted meaning of termination. How much salary I am eligible for this release notice? One month or three month?
Deepak M
Oct 25. 2012
notice period as mentioned in your employment agreement.
Yasin
Oct 24. 2012
Hi Deepak,
I am working in Abu Dhabi with one firm which is paying me 3000 AED as Basic for Camp Boss. I am not being paid any over time for my extra hours working. Am i entitled to claim Overtime? If so, what could be my OT1, OT2 & holiday OT per hour?
Thanking you in advance…
Best regards,
Yasin.
Deepak M
Oct 24. 2012
If it is mentioned in your employment contract about OT then you are supposed to get Overtime.
If not you cannot claim….
As per UAE Labour Law OT will be paid as below:
If the nature of the job requires an employee to work overtime, the employee is entitled to overtime pay which is equivalent to the wage paid during ordinary working hours plus an additional amount of not less than 25% of the wage for the over time period. However, if the employee’s overtime falls between the hours of 9.00pm and 4.00am, he will be entitled to overtime pay which is equivalent to the salary payable during normal working hours plus an increase of not less than 50% of his wage for the overtime period worked.
If circumstances require the employee to work on a Friday, he is entitled to receive a rest day in lieu to be taken at a later date or be paid his basic wage plus an additional 50% (minimum) of that wage. However, employees cannot be asked to work two consecutive Fridays unless their wages are calculated on a daily basis. In any case, overtime should not exceed two hours per day, unless it is necessary to prevent substantial loss, a serious accident or to remove traces of such an accident or reduce its effect.
However, the above provisions are not applicable to the following persons:
(1) Persons in senior positions, or in administrative supervisory roles, if such persons have similar authority over employees as the employer.
dinesh
Oct 27. 2012
i would like to know – i am in company from last 6 years and my visa is expired and company all sudden dont want to renew my visa and asking me to leave giving reason for my non performance in my job . can i demand for more benefits or rights due to immediate leave from the company. how much gratuity i will get for 6 years – 1 months service if i am in unlimited contract . my basic salary in 5000 current .