End-of-service benefits or gratuity are crucial financial benefits for an employee in the UAE. It is a lump sum paid by the employer to an employee who leaves an organization after completing a specified period of service. An employee should always know how and under what conditions a gratuity can be paid to ensure that he/she receives the right amount.
Who is Eligible for Gratuity Pay in the UAE?
Any employee who has been employed in an establishment for a period exceeding one year is entitled to gratuity under a limited or unlimited contract. While some employees will resign from their positions & others will be dismissed, the law in the UAE provides for end-of-service gratuities in both cases, under certain conditions. In the case of employees who do not complete one year of service, gratuity is not given.
How Gratuity is Calculated: The Basic Formula
Normally the employee is entitled to receive 21 days of basic salary as gratuity for every year of service under the first five years, and if the employee exceeds five years this will be increased with 30 days of basic salary for every year of service. The computation shall be based on the last basic salary paid to the employee, without any allowances. The employer, however, can offer extra benefits according to his company policy.
Step-by-Step Gratuity Calculation for Limited Contracts
For limited contracts, gratuity is paid only for the duration of service. If the worker leaves before finishing one year, he cannot claim gratuity. Between one and five years, gratuity is 21 days of salary per year. Beyond five years, the gratuity is 30 days of salary for each additional year worked.
Step-by-Step Gratuity Calculation for Unlimited Contracts
Gratuityst for unlimited contracts are 21 days’ salary for each of the first five years and 30 days’ salary for each of the years thereafter. Resignation after having served more than one year but less than five years entitles the employeest to 21 days’ salary for each of the completed years. terDischargest during the same period receives the same treatment as resignation.
How Resignation vs Termination Affects Your Gratuity
The kind of resignation or termination applies to gratuity entitlements. Part of the gratuity may be forfeited from voluntary resigning employees if they leave before completing one year or if they resign without giving the period stipulated in the contract as notice. On the other hand, employees terminated without cause are entitled to full gratuity according to their length of service.
How to Estimate Your Gratuity: Online Calculators & Tools
Estimated gratuity amounts can be computed using online UAE Gratuity Calculator provided through government websites or financial portals. Statutory details include the employee’s final basic salary, number of years served, and contract type to accurately estimate the gratuity payout. Inputting the correct information, therefore, is key to obtaining precise results.
Common Exceptions & Special Cases in Gratuity Calculation
The following list outlines several common exceptions and special cases in calculating end-of-service gratuity:
- Termination for Misconduct: Mugfollech ought not to be paid with gratuity for the termination of an employee. Instances of misconduct are acts such as defrauding, stealing, and others that constitute breach of company policy. With these occurrences, irrespective of the employee having fulfilled even the minimum years of service, gratuity cannot be given to that employee.
- Leaving During Probation: Employees who voluntarily resign or have their employment terminated during probation are not entitled to any gratuity payment. Probation is typically considered to be the period between six months and one year. It is regarded as a trial period, and hence, under UAE Labor Law, no gratuity is paid should employment be terminated during this duration.
- Resignation Before Completing One Year: No gratuity shall be payable to any employee who resigns before completing one year of service, and this applies to both limited and unlimited contracts. The gratuity benefit is only acquired during or after one year’s worth of continual service.
- Special Rules for Government Employees: Government employees or for those working for semi-governmental bodies, different rules of gratuity may apply, often governed by separate laws or internal regulations. As a matter of fact, they may be endowed with more favorable terms or different manners of calculation; including pension arrangements in other cases, rather than the regular gratuity system.
- Employees on Fixed-Term Contracts: With fixed-term contracts, limited contracts can have a different basis for gratuity calculation. If, for any reason, they do not complete the fixed-term contract, such an employee might either lose his gratuity or only receive half, relative to the number of days worked.
Including vs Excluding Allowances in Gratuity Calculations
Gratuity calculation is always on the last basic salary of the employee and excludes any allowance like housing, transportation, or bonuses. Nonetheless, few organizations might consider allowances in their gratuity calculation as per their own internal policies. It is advisable, therefore, to clear out with the employer what constitutes the basic salary to estimate accurately.
What to Do If Your Gratuity is Disputed or Delayed
Should your gratuity be delayed or disputed, your first action would be to talk to the HR department of the employing entity for clarification. Failing resolution, you may lodge a complaint with the Ministry of Human Resources and Emiratisation of the UAE. The ministry then reviews, and if worthy, undertakes legal proceedings to ensure that your claim is honored.
Conclusion
You can visit the Emirates Platform to learn how to calculate end-of-service gratuity and other employee benefits according to the UAE labor law. Be sure to track your years of service carefully and check on your final payout before leaving any job, whether it has a limited contract or an unlimited one, to receive your full payment.