Gratuity Calculator UAE: Calculate Your End of Service Payment

UAE Gratuity Calculator

This gratuity calculator UAE calculates your expected gratuity amount based on the years of service and your basic salary. It is not meant to be definite as it does not take into account any special conditions. Use this calculator to get an estimate of your gratuity based on the new UAE labor laws.

What Does Gratuity Mean?

Gratuity is the amount of money an employer will pay you after the end of your employment. It is a mandatory payment for every employee who is eligible, and is calculated based on your salary.

Also called the “final settlement” or an “end of service benefit”, it is meant to act as a safety net for individuals in between jobs to help them manage their expenses. Gratuity increases the longer you stay with an employer, so it also incentivizes employees to commit to a job.

It’s important to remember that gratuity in UAE is calculated on your last paid basic salary, not the gross salary. So if you make AED 15,000 a month, but AED 7,000 of that is housing and transport allowances, your basic salary is AED 8,000 and will be the basis of your gratuity payment calculation.

3 Factors That Affect Gratuity in UAE

As per the labour regulations in the UAE outlines specific rules on how gratuity is calculated in the country. The regulations were established to standardize the calculation process and highlight certain factors that will influence the gratuity amount. Below are the key provisions:

1. Duration of Employment

A recent update to the UAE labor law allowed employees to receive gratuity after completing one year of service with an employer. However, your probation period does not count towards the gratuity amount, unless stated otherwise in your contract.

If you work at a company for less than five years, gratuity will be calculated on the basic salary for 21 days, for every year of employment for the five years. Gratuity calculations for employment periods over five years are a little different.

Say you worked at a company for six years and then left. Your gratuity will be calculated on 21 days of your basic salary for the first five years, and then on 30 days of your basic salary for the next year.

If you worked somewhere for seven years, you would get 30 days of your basic salary for an additional two years. In any case, gratuity payments cannot go over two years of your basic salary.

2. Type of Contract

Generally, you can be hired under a limited or an unlimited contract. A limited contract just means that your employment has a set end date, but can be renewed. An unlimited contract does not have an end date.

Gratuity calculations under limited contracts will be based on the entire length of service. For unlimited contracts, the gratuity amount depends on whether the employee resigned voluntarily or was terminated by the employer.

3. Termination vs Resignation

The way you end your employment also affects the way your gratuity is calculated. If you were terminated, the gratuity formula calculator remains unchanged, and all the above rules still apply, regardless of the type of contract. If you were terminated for negative reasons, you will not be entitled to any gratuity.

If you resign under an unlimited contract, your gratuity payment will be calculated on a pro-rata basis if you worked for an employer for less than five years. If you were employed for more than five years, you will receive the entire gratuity payment as per the normal rules.

Gratuity Calculation Formula

Gratuity = (Basic Salary x No. of Eligible Days x Years of Service) ÷ 30

Example 1 : Let’s say you were at a company for five years and then resigned. You were hired on an unlimited contract and were paid AED 7,000 as your basic salary. This is how your gratuity will be calculated:

(7,000 x 21 x 5) ÷ 30 = AED 24,500

Example 2 : Or suppose you decided to retire from your job after a 20-year stint, where you had a basic salary of AED 35,000. Your gratuity would be:

(35,000 x 21 x 5) ÷ 30 + (35,000 x 30 x 15) ÷ 30 = AED 647,500

What Happens When Employers Don’t Pay Gratuity?

As the UAE mandates gratuity payments to eligible employees, failure to make these payments can get your employer into trouble with the government. Employees have the right to file a complaint to MOHRE (Ministry of Human Resources and Emiratisation) if they do not receive their gratuity within 14 days of the end of their employment.

Employers that delay payments can face consequences like:

Heavy penalties
Legal intervention
Added interest on pending gratuity payments
Suspension of trade license
Difficulty in recruiting new hires

Frequently Asked Questions

How do I Calculate Gratuity in the UAE?

Gratuity is calculated based on your basic salary, years of service, and can be affected by whether you resigned or were terminated from your job. The formula is your basic salary multiplied by the number of eligible days multiplied by years of service divided by 30.

Can I Get Gratuity if I Resign After One Year?

You can get gratuity if you resign after one year. The UAE now allows employees to receive gratuity after they complete one year of service at an employer.

Can Gratuity be Paid in Advance in UAE?

You can withdraw some of your gratuity amount in advance, however, this amount will be deducted from your end of service payout when you leave the company. You cannot receive your entire gratuity until you end your employment contract.

What is the New Rule for Gratuity in UAE?

Gratuity can now be paid to employees who have completed one year of service at a company in the UAE.

Can I Get Gratuity if Terminated in UAE?

If you are terminated, you might still be eligible for gratuity if you worked at your company for at least one year. If you were terminated for misconduct or other similar reasons, you will not be eligible for gratuity.

What are the Rules for MOHRE Gratuity?

According to MOHRE, every employee in UAE is eligible for gratuity after one year of employment at a specific company.

Do You Get Gratuity If You Resign?

You can receive gratuity if you resign but you you need to have completed a minimum of one year of service to be eligible. If you resign in less than five years at a company, your gratuity amount will be calculated on a pro-rata basis.

What is the Maximum Limit of Gratuity Payment?

Your gratuity payment cannot exceed two years of your basic salary. This is the salary you receive without including benefits or allowances.

What is the Minimum Service for Gratuity?

The UAE labor law dictates that employees must be employed for at least one year at a company before they can receive gratuity. However, certain conditions may warrant earlier eligibility.

When Will I Get Final Settlement in UAE?

Your employer has 14 days after the end of your contract to pay you the gratuity amount. If you do not receive your final settlement amount within this time, you can file a complaint with the MOHRE (Ministry of Human Resources and Emiratisation).

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