Gratuity Calculator
by Zoho PayrollYour Gratuity amount will be
What is gratuity?
Gratuity, or end-of-service benefits, is a lump sum amount paid to employees by the employer upon leaving their organization in the United Arab Emirates (UAE). It is a token of appreciation awarded to employees who have continuously served an organization for a certain period.
Who is eligible for gratuity in UAE?
Article 51 of the UAE's labor law mandates that non-GCC national employees or expatriates working in the private sector receive gratuity upon leaving the organization after completing at least one year of service. However, with the introduction of the new end-of-service benefits schemes, UAE citizens or Emiratis, can also voluntarily register for gratuity.
Note: Employers must subscribe to the new scheme with the Ministry of Human Resources and Emiratisation (MoHRE) to provide end-of-service benefits to Emirati employees.
How is gratuity calculated in UAE?
The gratuity amount is calculated based on the employee's last drawn basic salary, duration of service, and their reason for leaving the company.
If a limited contract employee serves between 1 and 5 years and is terminated, their gratuity is:
Gratuity=(Basic salary * 21 * number of years served)
However, if they serve more than 5 years, their gratuity is:
Gratuity=[Basic salary * 21 * 5] + [Basic salary * 30 * (Years of service - 5)]
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If an employee served between 1 and 5 years and is terminated,
their gratuity equals: (Basic salary per day * 21 * Number of years of service)
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However, if they've served 1 to 3 years and resign,
their gratuity equals: (Basic salary per day * 21 * Number of years of service) * (1/3)
Note: The new labour law mandates employers must transition their unlimited contract employees into fixed-term contract employees. The employer and the employee must agree on a fixed term of any duration and convert their employments to limited contracts and calculate gratuity accordingly.
Gratuity calculations in Dubai generally follow the UAE's standard procedure, except for employees within the Dubai International Financial Centre (DIFC) free zone, who follow a different method.
In the DIFC, employers contribute a specific percentage of the employee's basic salary based on their years of service.
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For employees with 1 to 5 years of service, the formula to determine the employer's contribution is:
(Basic salary * 5.83 / 100).
- For those with 5 or more years of service, the employer must provide (Basic salary * 8.93/100) as their gratuity.