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How to calculate UAE gratuity pay

Use this formula to calculate your correct gratuity pay entitlement


Calculating your end-of-service (gratuity) pay is important. Knowing how the total sum is reached will help
you identify any errors made by your company.

Click here for the UAE Labour Law clauses regarding gratuity pay.

Calculations for gratuity pay differ depending on whether youre on a Limited contract or
Unlimited contract.

Contract types
A limited or fixed term contract is where the employee agrees to stay with the company for a certain
number of years with a set end date. Resigning before the end of this period could mean one or all of these
a labour ban, loss of labour rights or even payment of compensation to the employer.

An unlimited contract has no such period clause or number of years, and therefore, has no end date.
However, a notice period of one to three months is applicable for termination of contract from either side.

Notes

Gratuity pay is calculated based on the most recent salary paid into your account. If you are terminated
from your job, unless you break the rules as stated in Article 139 of the Labour Law, the employee is still
entitled to gratuity pay.

Calculationsfor Limited Contract gratuity pay


Less than 1 year of service
Leaving work before completing one (1) year of service means that you are not entitled to any gratuity pay.

Between 1 year and 5 years of service


Employee is entitled to full gratuity pay based on 21 days salary for each year of work.

5 or more years of service


Employee is entitled to full gratuity pay based on 30 days salary for each year of work.

Calculation example
Basic salary example: Dh10,000

a. 10,000 30 = 333.30. Your daily wage is Dh330.30

b. 330.30 x 21 = 6,936.30. So 21-days salary is Dh6,936.30 in gratuity entitlement for each year of service.
Multiply this figure for every year of service up to 5 years.

For 30 days calculation for those exceeding 5 years of service

c. 330.30 x 30 = Dh9,909. So 30-days salary is Dh9,909 in gratuity entitlement for each year of service so
long as the total figure does not exceed two years total salary figure.

Calculations for Unlimited Contract gratuity pay


Less than 1 year of service
Leaving work before completing one (1) year of service means that you are not entitled to any gratuity pay.

Between 1 year and 3 years of service


Employee is entitled to one third (1/3) of the 21-days gratuity pay.

Between 3 years and 5 years of service


Employee is entitled to two thirds (2/3) of the 21-days gratuity pay.

5 or more years of service


Employee is entitled to full 21-days gratuity pay.

Calculation example
Basic salary example: Dh10,000

a. 10,000 30 = 333.30. Your daily wage is Dh330.30

b. 330.30 x 21 = 6,936.30. So 21-days salary is Dh6,936.30

Of this figure of Dh6,936,30, only 1/3 is payable if you have worked between 1 and 3 years, so the total
gratuity pay would be Dh2,312.10.

Only 2/3 is payable if you have worked between 3 and 5 years, so the total gratuity pay would be
Dh4,624.20.

The full Dh6,936.30 is payable if you have completed 5 years.

These calculations are not to be treated as law, they are for your reference only. For any disputes or further
clarification, contact the UAE Ministry of Human Resources and Emiratisation.

Formula
1. Monthly salary 30 = Daily wage

2. Daily wage x 21 = 1 year gratuity figure (Or x30 if applicable)

3. 1 year gratuity figure x years of service = Total gratuity owed

Only continue for Unlimited Contract calculation

4. Total gratuity owed 3 = One third (1/3) of total gratuity

5. Either take this figure or multiply it by two for final figure.

Calculate your gratuity here using this formula

Web 2.0 scientific calculator

Source UAE Ministry of Human Resources and Emiratisation

Call centre For any Labour issues, call 800 665

Locate your nearest Ministry of Human Resources and Emiratisation office


Gulf News is not responsible for any amendments made to the UAE Labour Law. All labour disputes must g
through the Ministry of Labour. This article may only be used as a guide.