Gratuity Calculator for UAE
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Easy to Use
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What is Gratuity in UAE? Gratuity Meaning
Gratuity (مكافأة) is a lump sum payment given to an employee by the employer or hiring company in the UAE and Dubai at the end of his service tenure. As per UAE Labor Law, employers are liable to disburse gratuity benefits to their workers upon exceeding one year of service. It is calculated based on service rules, job leaving method (resignation or termination), and type of service contract.
How Does the UAE Gratuity Calculator Work?
Manual calculation of your gratuity pay is bit difficult and can cause some errors. An online gratuity calculator is a free and handy tool for end-of-service gratuity computation in the UAE. The gratuity calculator 2023 gives you an approximate gratuity amount by entering your vital information, such as your last basic salary amount, the total number of service years, the type of your contract, i.e., limited or unlimited contract in an organization, and the way of leaving your job. The gratuity amount calculator facilitates you in UAE gratuity calculation with a few clicks by using specific methods and formulas.
Key Steps for Calculating End-of-Service Benefits Via Gratuity Estimator
As per Article 51 of the UAE Labor Law, gratuity payment is a benefit provided to expatriate employees working in the private sector. To get an estimate of your gratuity entitlements with the online gratuity calculator tool, you must know the following employee details to get the most accurate results:
- Complete Minimum Service Period
To qualify for gratuity pay, it is necessary to fulfill a minimum of one year of continuous service. Employees who do not complete the required duration of employment in either the private or public sector would not be eligible for gratuity payment.
- Know your Basic Salary
The gratuity computation is based on the employee’s basic pay in the UAE. So, make sure to enter the exact amount of your basic salary to get an estimate of your accurate amount of gratuity.
- Enter the Contract Type
Select this area depending on the type of contract you’ve provided your services. You may choose the limited or unlimited contract in this block based on the contract type you have worked for your company.
- Select the Way by Which You Left your Job
Choose the option depending on whether you’ve left your job upon completing your service tenure, resigned before the period, or got terminated. An accurate description must be provided here because gratuity calculation differs for every job-leaving method.
- Add the Start and End Date of your Service
Carefully enter the date of the start and the last date and year of your job tenure to get an exact gratuity estimate.
Gratuity Calculation Formula for Limited Contract
In limited contracts, the employees make the contract of some particular service years with a company for which they are bound to complete their contract. Failing to accomplish this agreement may cause a loss of your labor rights, including gratuity.
Gratuity Calculation Formula for Unlimited Contracts
The employee does not sign a contract for a set number of years to stay with a company under an unlimited contract because it is not time-bound. Based on company policies, the employee may give one to three months’ notice before quitting. There are 2 conditions for gratuity entitlements in unlimited contract type, i.e., gratuity on resignation or termination.
Resignation
The following rules should be applied to calculate end-of-service benefits for employees who resign from their jobs in unlimited contracts:
- Resignation before 1 year of service: No gratuity will be paid by the employer or hiring company
- Resignation between 1-3 years of service: 1/3rd of 21 days basic salary for each service year will be considered as gratuity entitlement.
- Resignation in 3-5 service years: 2/3rd of 21 days basic salary for each year is entitled as gratuity.
- Resignation after 5 years of service: For the first 5 years of service, 21 days of basic salary, and above 5 years, 30 days of basic pay for each subsequent year is entitled to gratuity.
Termination
The following new gratuity rules shall be applied in case of termination of an employee by the hiring company:
- Before completing 1 year of service: No gratuity entitlements
- More than 1 but less than 5 years of service: For every year, 21 days of basic pay will be entitled as gratuity.
- Above 5 years of service: For the first 5 years, gratuity computation will be done as 21 days of basic pay and 30 days of basic salary for each year.
Can Gratuity be Denied?
Article 139 of the UAE Labour Law mentions situations where an employee may be excluded from receiving gratuity payment. These conditions are listed below:
- Employees who resign without submitting proper notice, except in circumstances outlined in Article 121 (such as employer contract breaches or assault), are ineligible for gratuity entitlement, particularly under unlimited contracts. Moreover, under limited contracts, resigning before completing five years of continuous service also renders an employee ineligible for gratuity.
- If an employee is terminated for reasons elaborated in Article 120 of the UAE Labour Law or resigns solely to evade dismissal, his gratuity payment may be denied.
Secure Your Gratuity Benefits
Employees can secure their gratuity benefits by ensuring they fulfill the eligibility criteria outlined in the UAE Labour Law, including completing a minimum of one year of continuous service. Also, it is crucial to maintain clear records of employment, such as contracts, salary statements, and proof of service duration.
Upon resigning or upon termination, employees should formally request their gratuity entitlement from their employer. In cases of dispute, seeking guidance from relevant authorities or legal counsel can help ensure that gratuity benefits are rightfully received.
To ensure receipt of your gratuity entitlements per UAE Labour Law, the following proactive measures are essential:
- Familiarize with your Employment Contract
Before starting your job in the UAE, you must read the terms and legal documents thoroughly to understand your contract details as every job and contract type has its own process of calculating the end-of-service entitlements.
- Know your Legal Rights in the Emirates
Educate yourself on UAE Labour Law provisions governing gratuity entitlements to know eligibility conditions and scenarios where gratuity may not be applicable.
- Keep your Employment Record
Maintain the records of your employment history, encompassing start and end dates, salary particulars, and contractual terms, that will help you claim your gratuity whenever required.
- Discuss Concerns with your Employer
Sustain transparent dialogue with your employer regarding gratuity concerns or queries, ensuring mutual understanding throughout the job duration.
- Seek Legal Assistance
Seek counsel from legal experts specializing in labour law if confronted with disputes or uncertainties regarding gratuity entitlements, safeguarding your rights effectively. Through proactive engagement and informed action, you can secure the entitled benefits upon the conclusion of your employment contract in the UAE
