Understanding your end-of-service benefits, or gratuity, in the UAE is crucial for expatriates and locals alike. This calculator provides an estimate based on the current UAE Labour Law (Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, effective from February 2, 2022).
What is End-of-Service Gratuity?
End-of-service gratuity is a lump-sum payment made by an employer to an employee upon the termination of their employment contract, provided certain conditions regarding the length of service are met. It's a fundamental right designed to provide financial support to employees as they transition out of their roles.
Who is Eligible for Gratuity in the UAE?
Generally, employees who have completed at least one year of continuous service are eligible for gratuity. The law applies to employees working under limited or unlimited contracts. However, the amount of gratuity depends on several factors, including the length of service and the reason for termination.
How is Gratuity Calculated?
The calculation of gratuity in the UAE primarily depends on three key factors:
- Basic Monthly Salary: Only the basic salary, excluding allowances (housing, transport, utilities, etc.), is used for gratuity calculation.
- Length of Service: The total number of years, months, and days an employee has worked.
- Reason for Leaving: Whether the employee resigned or was terminated by the employer.
Detailed Gratuity Calculation Scenarios:
1. Less Than One Year of Service
If an employee completes less than one year of service, they are generally not entitled to any end-of-service gratuity.
2. One to Five Years of Service
- Termination by Employer / End of Contract: The employee is entitled to 21 days of basic salary for each year of service.
- Resignation:
- From 1 to less than 3 years of service: The employee is entitled to one-third (1/3) of the 21 days basic salary for each year of service (i.e., 7 days per year).
- From 3 to less than 5 years of service: The employee is entitled to two-thirds (2/3) of the 21 days basic salary for each year of service (i.e., 14 days per year).
3. More Than Five Years of Service
- Termination by Employer / End of Contract: The employee is entitled to:
- 21 days basic salary for each of the first five years of service.
- 30 days basic salary for each year of service exceeding five years.
- Resignation: If an employee resigns after completing more than five years of service, they are entitled to full gratuity, calculated in the same manner as termination by the employer:
- 21 days basic salary for each of the first five years of service.
- 30 days basic salary for each year of service exceeding five years.
Gratuity Cap
It's important to note that the total end-of-service gratuity payable to an employee shall not exceed two years' basic salary.
Using the UAE Gratuity Calculator
Our easy-to-use calculator simplifies this complex process. Simply input the following details:
- Basic Monthly Salary: Enter your basic salary in AED.
- Employment Start Date: The date you began your employment.
- Employment End Date: The date your employment officially concluded.
- Reason for Leaving: Select whether you were terminated/contract ended or if you resigned.
Click "Calculate Gratuity" to get an immediate estimate of your end-of-service benefits.
Important Considerations and Disclaimer
This calculator provides an estimate based on the general provisions of the UAE Labour Law. Actual gratuity calculations can be influenced by specific clauses in your employment contract, company policies, or deductions for loans, damages, or other liabilities. Always consult with your employer's HR department or a legal professional for precise figures and advice tailored to your specific situation.
This calculator does not account for:
- Unpaid leave periods.
- Absence without legitimate cause.
- Specific termination reasons (e.g., gross misconduct) that might forfeit gratuity.
- Pension schemes or other alternative benefit structures for UAE nationals.
The information provided here is for general guidance only and does not constitute legal advice.