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?
————————————————————————————————————————————————
Read the updated article on EOSB/Gratuity Calculation in Dubai UAE
.
————————————————————————————————————————————————
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)= 2281 days
- Total number of years he worked=1916/365= 6.25
- 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+
(2,218/365-5)*30*328.76=2,459. 00=46,842
—————————————————————————————————————————————————-
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 intended for personal use and comfort.
Recent Posts
How to get a vehicle license plate replacement in Dubai and Other Emirates? Have you misplaced your vehicle license plate while driving? Or has it been damaged or lost its shape or color? Don't...
Checking UAE Residence visa Grace Period Online The UAE residence visa grace period is a short time after your visa expires. It gives you extra time to leave the country and fix any visa issues....