What is Gratuity Entitlement?
Employees in the UAE enjoy several benefits after their service, with gratuity being one of the most significant. Gratuity is the compensation provided by your employer when you leave your job or upon completing your service term. However, many employees remain unaware of this important entitlement. They may not fully understand the policies surrounding gratuity, how it is calculated in the UAE, or the factors that can influence the final amount.
UAE Gratuity Calculator simplifies the process, providing you with an accurate calculation of your gratuity based on UAE labor laws and guidelines. Whether you’re planning your financial future or looking to understand your rights, we’re committed to guiding and supporting you in making informed decisions about your end-of-service benefits.
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UAE Labor LawYour Questions Answered
How is gratuity calculated in UAE, and what is the latest gratuity law?
Under the UAE New Labour Law (2023), gratuity is calculated based on an employee's basic salary and years of service. Employees are entitled to full gratuity after completing one year of continuous service. For the first five years, the gratuity is calculated as 21 days' basic salary per year of service, while for service exceeding five years, it increases to 30 days' basic salary for each additional year.
However, the total gratuity can be up to two years' worth of the employee's basic salary. The updated law emphasizes timely payments, requiring employers to settle gratuity within 14 days of an employee’s departure. To simplify the process, employees can use online gratuity calculators to determine their entitlements. This law reflects the UAE's commitment to ensuring transparency and protecting workers’ rights.
Who is eligible for gratuity in the UAE?
Gratuity pay is only available to expatriate workers in the UAE. UAE nationals are precluded from these provisions because they are eligible for mandatory National pension plans.
When should anyone not be paid gratuity?
As per UAE Labor Law, employees who resign before completing one full year of service aren’t entitled to gratuity pay. However, if the employee owes any outstanding debts to the employer, the employer can deduct the amount from the gratuity.
Are there deductions from gratuity?
Yes, if the worker owes any money to the employer, the employer may deduct the amount from the worker's gratuity. This is outlined in the provisions for end of service benefits under the UAE Labour Law. Additionally, all end of service entitlements must be paid within 14 days from the contract's end date.
Is gratuity taxable in the UAE?
No, gratuity is not taxable in the UAE. The UAE does not have an income tax system, hence, gratuity and other employment benefits are not subject to personal income tax.
How does resignation impact gratuity?
When an employee voluntarily resigns, they are generally entitled to receive a gratuity for the period of service completed. However, depending on the employment contract terms, employees who resign before completing one year of service may not be eligible for gratuity.
When does an Employee become Eligible for Gratuity in UAE?
UAE employees become eligible for gratuity at the end of their service tenure, either termination or resignation. But, the employees who have served an institute for less than one year are not entitled to gratuity pay.
Gratuity calculation of unlimited contract?
If you have an unlimited contract in the UAE, you can calculate your gratuity based on your length of service:
- 1 year – 3 years of service
The employee is entitled to one-third (1/3) of the 21-day gratuity pay - 3 years – 5 years of service
The employee is entitled to two-thirds (2/3) of the 21-day gratuity pay. - 5 or more years of service
The employee is entitled to full 21-day gratuity pay.
Gratuity calculation of limited contract?
Under the new UAE labor law amendments, all employment contracts are now required to be limited.
For employees with a limited contract:
- Less than 1 year of service
If you leave work before you complete one year of service, you are not entitled to any gratuity pay or final settlement. - 1 year – 5 years of service
The employee will receive full gratuity based on 21 days of salary. - 5 or more years of service
Employees are entitled to full gratuity pay based on 30 days' salary for every year of work.
Disclaimer
This gratuity calculator aims to provide UAE employees with an estimated calculation of their end-of-service gratuity based on basic salary and years of service. It excludes other benefits like unused leaves, airfare, or notice pay. This calculator is designed to account for the most common scenarios under UAE Labor Law. However, it is important to understand that the gratuity amount calculated is based solely on basic salary and does not consider other components of end-of-service benefits.
Qureos is not liable for inaccuracies; this tool is for guidance only and does not replace professional advice or legal consultation.
