Author: contact@aftabhassan.com

When I moved to the UAE years ago, I had no idea how important it would be to fully understand gratuity, especially when nearing retirement or considering relocation. As an employee, the day you leave your job, whether due to new opportunities or personal challenges, your employers are obliged by law to pay an end-of-service payment.

This is not just a goodwill gesture — it’s a legal requirement under UAE labor law, based on your length of service, last drawn salary, and type of contract. However, I found that calculating the exact amount was more tricky than expected. There are several factors influencing the final payout, and knowing the basic definitions helped me a lot in understanding what was required from both sides.

The whole process may seem complex, but with some guidance, it can be simplified. There’s a simple, yet accurate way to calculate your gratuity using a gratuity calculator that helps you instantly determine your due amount. You just need to enter your employment details and let the tool do the math.

But before jumping in, make sure you meet the eligibility requirements outlined by the UAE labor law. Once you’re ready, walk yourself through your service record and calculate the gratuity you’ve rightfully earned. I’ve done it myself, and trust me, once you get started, it’s much easier to accurately see what you’re owed.

checkout gratuity calculator UAE

What Is Gratuity?

When I left my first organization in the UAE, I was pleasantly surprised to receive a payment called gratuity — a legally mandated benefit often referred to as end-of-service compensation. It’s a way for your employer to show appreciation for the services you’ve rendered during your term with the company. According to UAE labor law, every employee who has worked for a firm is entitled to this reward once they are leaving, provided all prerequisites are fulfilled.

The amount you receive is typically payable based on your monthly basic salary, and although commonly awarded upon retirement, some do claim it earlier depending on their organization’s terms and conditions. When I did mine, it all depended on how the company interpreted the law — which is why it’s important to understand your own entitlement fully before making assumptions.

Who Is Eligible for Gratuity in UAE?

Working under the UAE labor law, I learned early on that not every employee is automatically entitled to gratuity payments. There are strict conditions that must be met for these benefits to become applicable. First and foremost, there has to be an employment contract in place — either limited or unlimited. Also, the employee must have worked continuously for a minimum of one year with the employer.

In my case, I was on an unlimited contract and had to be careful when considering resignation. If an employee resigns without completing the notice period, or fails to prove the employer’s failure in meeting legal obligations, the end-of-service benefit may not be granted.

There’s even more complexity — one must provide solid evidence in cases involving assault by the employer or their representatives. Even UAE nationals and expatriates must follow the same rules. Furthermore, if you’re dismissed under Article 120 for non-compliance, you may not be eligible for any gratuity payment.

Factors to Consider for Gratuity Pay Calculation

Type of Contract

While working in the UAE, I encountered two main types of employment contracts — limited and unlimited. At first, I thought they were the same, but soon realized that the rules for calculating gratuity actually differ based on the type of contract. Understanding these contracts in detail helped me navigate my exit terms properly and secure what I was fairly owed.

Last Basic Salary

From my own exit experience in the UAE, I found that when calculating end-of-service benefits, only the last drawn basic salary is considered — nothing else. The employee’s total salary may include allowances or additional perks, but those aren’t factored in. It’s the amount you received just before the termination of your contract that matters, not what you were receiving in bonuses or extras.

I remember a friend who had a salary package of AED 4,000 while working in Dubai. His pay was inclusive of fuel allowance, housing, and occasional overtime, but still, only AED 4,000 was considered as his basic salary when it came to gratuity. These extras didn’t count — and that’s something many employees don’t realize.

Similarly, I noticed that any deductions from a person’s salary, like salary sacrifice schemes, are not included when calculating the basic component either. It’s essential to know what really counts in the final figure.

Duration of Employment

According to UAE Labour Law, a gratuity payment is only given to employees who have worked in the organization for at least one year. When I hit that milestone myself, it became clear that the tenure calculation wasn’t just about the calendar — it was about the actual number of days worked.

The gratuity calculator only considers continuous service between your first and last working day. So, if you’ve taken extended leave like sabbaticals, those don’t count. I checked this with the Ministry of Human Resources and Emiratisation (MoHRE), and they confirmed that any employment period must exclude unpaid breaks or holidays during service to be eligible.

Read More: End of service benefits for part-time workers UAE

What are the Types of Contracts?

Before I began calculating my gratuity, I made sure to review the types of contracts I had signed with my employer. Under UAE Labour Law, there are limited and unlimited contract types, and the difference between them really shows in how your end of service benefits are handled upon termination. The terms set in each contract can affect what you’re entitled to, so it’s essential to understand them clearly from the beginning.

Limited Contracts

In my first role under a limited-term contract, I quickly learned that these fixed contracts come with a set term or time period, often used when an employer wants to engage an employee for a specific project or a defined duration. This contract clearly mentioned the start and end dates of the employment period, and I had to align everything accordingly.

Once the contract expires, it gets canceled unless it’s renewed. I worked with a team of project workers, and when our project was completed, we exited the workplace as expected.

Joining a company on such terms means the employee agrees to stay for that fixed duration. If you decide to resign before that period ends, you might face consequences like a labor ban, losing your labor rights, or even being asked to compensate your employer — something I saw happen to a colleague who left early.

Unlimited Contracts

Unlike a limited contract, an unlimited-term contract feels more open-ended and flexible, which is why I personally preferred it. There’s no specified period the employee must stay with the company, making it the more commonly used contract type in the UAE.

These contracts can be terminated through mutual consent or a notice period that typically ranges from one to three months from either side. I remember having to give my full notice period, and during that time, all parties were expected to respect their obligations, which made the transition smooth and fair.

In a nutshell:

One thing I liked about working on an unlimited contract was that it came with no fixed end date, giving me more flexibility in my long-term career planning.

In case of termination, a notice period of one to three months is required — whether initiated by the employee or the employer. That notice structure really helped ensure smooth transitions on both ends.

Finally, your gratuity calculation under this contract depends directly on your duration of service, making it essential to track your time accurately from the very start.

Gratuity Pay Calculation for Limited Contracts

I found it quite eye-opening that in both types of contracts, the gratuity calculation isn’t just a flat number — it’s divided into tiers depending on whether you resign or get fired. That distinction made a big difference in how much I walked away with.

For employees on limited contracts, the amount is tied to the length of service and the nature of the termination. The payment breakdown is usually like this: contract completion with less than 5 years of service, or more than 5 years.

But if an employee is fired while under a limited contract, the tiers shift. You’re then categorized as having 1–5 years of service or 5 years or more, which directly influences what you’re entitled to receive.

In the event of resignation:

I always advise newcomers to be cautious — if you resign before completing one year of service, you’re not entitled to any gratuity pay. That’s one of the rules I learned the hard way early in my career.

For employees who’ve completed less than 5 years, you’re eligible to receive a gratuity of 21 days of basic salary for each year of service.

Now, if you’ve served for 5 years or more, the benefits increase. You’ll get 21 days of basic salary for the first 5 years, and an additional 30 days of salary for every year beyond that 5-year mark.

In the event of termination:

In my experience, gratuity for employees with 1–5 years of service is calculated based on their basic salary, granting 21 days for each year worked.

For those who have served more than 5 years, the calculation changes slightly: they receive 21 days of basic salary for the first 5th year and 30 days of basic pay for every year beyond that. However, it’s important to note that the total figure of gratuity should not exceed the equivalent of two years’ total salary or wage.

Steps to Calculate Gratuity for Limited Contracts

Let’s say your basic salary is AED 15,000, and you’ve worked at a company for 4 years. Here’s a simple guide to calculating your gratuity pay. First, determine your daily wage by dividing your monthly basic salary by 30 days — so, 15,000 ÷ 30 equals AED 500 per day.

Next, multiply that by 21, since your total years of service are less than 5 years: 500 × 21 = AED 10,500. For those with more than 5 years, it would be 500 × 30 = AED 15,000 per year.

Finally, multiply by the total number of years of service — in this case, 4 — resulting in a gratuity of AED 42,000 at the end of service. Since this is a limited contract, this is the amount you’d expect when you leave the company.

Gratuity Pay Calculations for Unlimited Contracts

For employees on unlimited contracts, gratuity is calculated differently depending on the nature of the termination — whether it’s a resignation or termination due to misconduct or poor performance. The tiers are based on the duration of service, typically broken into 1–3 years, 3–5 years, and 5 years or more.

However, if the employee is terminated, only two tiers are applicable. The calculation rules change as the employee moves from one tier to another, usually between 1–5 years and 5 years or more of service. This tiered system helps adjust the gratuity amount based on how long the employee has worked and the reason for leaving.

In the event of resignation

If you’re an employee on an unlimited contract and you resign, your gratuity calculation changes depending on your length of service. For those with less than one year of service, you are not entitled to any gratuity.

If you’ve served 1–3 years, you’re entitled to 1/3rd of the 21-day gratuity pay for each service year. For those between 3–5 years, the gratuity increases to 2/3rd of the 21-day gratuity pay for each service year.

Employees who have worked over 5 years in the company receive the full 21-day basic salary for each service year as their gratuity. This tiered approach reflects how the law adjusts payments based on your time served before resignation.

In the event of termination

If your employer terminates you while on an unlimited contract, the gratuity calculation follows specific rules. For employees with less than one year of service, they are not entitled to any gratuity.

If an employee has served for over 1 year but less than 5 years, they are entitled to a gratuity of 21 calendar days’ basic salary for each year served.

For those who have served over 5 years, the gratuity increases to 30 calendar days’ basic salary for every additional year worked. This clear tier system helps employees understand what to expect when termination happens.

Steps to Calculate Gratuity for Unlimited Contracts

Just like with fixed-term contracts, the rules for gratuity calculation on unlimited contracts are pretty similar. Let’s say your basic salary is AED 15,000, and you’ve worked at a company for 4 years. You can use this simple formula to calculate your gratuity payouts.

First, find your daily wage by dividing 15,000 ÷ 30, which equals AED 500 per day. Then, multiply that by 21, since the total work period is less than 5 years: 500 × 21 = AED 10,500.

Next, because your work experience falls between 3–5 years, take ⅔ of that figure: ⅔ of 10,500 = AED 7,000. Finally, multiply this by your total years of service, which is 4, giving a total gratuity payable of AED 28,000 at the end of service under an unlimited contract.

How to Calculate Gratuity When Employee Contract Resigns

The formulas for gratuity calculation between unlimited contracts and limited contracts are almost the same, but there’s a slight difference when the employee under an unlimited contract resigns. In such cases, they are only entitled to either ⅓ or ⅔ of the gratuity payouts, depending on their service period.

For example, if your basic salary is 20,000 and you’ve worked at the company for 3 years, you can use these calculations for your total gratuity payable. For 1–3 years of service, the formula is:

(1/3rd of their basic salary of 21 days × basic salary × years worked) ÷ 30, which equals (7 days × 20,000 × 3) ÷ 30 = AED 14,000.

For service between 1–5 years, the formula changes to:

(2/3rd of your 21-day gratuity pay × basic salary × years worked) ÷ 30, which equals (14 days × 20,000 × 3) ÷ 30 = AED 28,000.

This makes it clear how your length of service affects the gratuity you receive when resigning under an unlimited contract.

FAQs

How is gratuity calculated in UAE?

Employees who have served between 1–3 years in the UAE are entitled to the full gratuity pay, which equals 21 days of salary per year. Those who have served more than 3 years or fall between 3–5 years are entitled to two-thirds of their basic salary as gratuity pay.

To calculate gratuity, simply multiply your daily wage by 21 if your tenure is under 5 years, or by 30 if your service exceeds that period. This clear rule helps employees understand their gratuity rights based on how long they have worked in the UAE.

Is gratuity in UAE calculated on the basic salary?

In the UAE, end-of-service benefits or gratuity are calculated based on the employee’s last drawn salary. Importantly, only the most recent basic salary is considered, while any additional allowances or perks are excluded from the calculation.

This ensures that the gratuity amount fairly reflects the core salary without factoring in extra benefits that may vary or be temporary during employment.

What is the new gratuity law in UAE 2025?

According to the new UAE Labor Law, contracts are now limited to a duration of five years. The gratuity calculation is based on the employee’s basic salary, with a 21-day salary considered for each year of service. However, if the service period exceeds five years, the gratuity is calculated based on 30 days of the basic salary for each year beyond the five-year mark.

Additionally, there is no difference in how gratuity is calculated whether an employee resigns or is terminated, simplifying the process and ensuring fair treatment for all employees.

Is gratuity added to the monthly salary?

A gratuity is a type of employee benefit that is granted based on the length of service. However, it is not included in the regular monthly salary, making it a separate payment to recognize the employee’s tenure.

When should anyone not be paid gratuity?

According to UAE Labor Law, if an employee resigns before completing one full year of service, they aren’t entitled to gratuity pay. Additionally, if the employee owes any outstanding debts to the employer, the employer has the right to deduct the owed amount from the gratuity.

This ensures fairness by protecting both the employer’s rights and the employee’s obligations.

Discover how the payment is calculated as per the UAE Employment Law

When I first moved to Dubai and got employed on a part-time basis, I was just as unsure as many others about whether I’d ever qualify for end-of-service gratuity. Many people think this benefit is only awarded to full-time employees when their service with a company ends. But the truth is, under UAE Labour Law, that’s not the case.

Thanks to Federal Decree No. 33 of 2021, part-time employees are not excluded from receiving gratuity—even though the calculation, eligibility, and criteria may differ from those for full-time workers. The law makes it clear that there’s a fair system for everyone. These specifics were later clarified in Cabinet Resolution No. 1 of 2022, which outlines how gratuity is calculated for non-full-time workers, including those in job-sharing contracts. So, if you’re working in the UAE on a part-time basis, it’s good to know that the system is structured to protect your rights and reward your contribution—no matter the hours you put in.

Read More:How to Write Application for Gratuity

Are part-time employees eligible for gratuity?

As per Clause 2 of Article 30 in Cabinet Resolution No. 1 of 2022, a part-time worker is entitled to receive gratuity only if they have completed at least one continuous year of service with their employer. This condition ensures that only those who have maintained consistent employment are rewarded appropriately.

If your employment duration is less than one year, then you are not eligible for end-of-service benefits under the current legal provisions.

How is gratuity calculated for part-time work?

The gratuity amount for part-time workers is calculated in proportion to the number of hours they work, compared to a full-time employee in the same organisation. The law provides a specific formula for this, clearly outlined in Clause 1 of Article 30.

Here’s how it works.

1. You first determine the total number of hours the part-time employee has worked over the course of one year, as per their employment contract.
2. Then, you divide that figure by the number of hours a full-time employee works in a year under a standard full-time contract.
3. After that, you multiply the result by 100 to get the percentage equivalent.
4. Now, you apply this percentage to the gratuity amount that would be paid to a full-time employee, to calculate the part-time worker’s end-of-service entitlement.

For example, if a part-time worker completes 1,000 hours per year and a full-time employee works 2,000 hours annually, the gratuity for the part-time worker would be 50% of the full-time entitlement.

Gratuity is not applicable to employees on temporary contracts if their total employment period is less than one year. This approach helps ensure that part-time workers in the UAE are compensated fairly for their service, in proportion to the time they have worked.

If you’re employed under a part-time or flexible work arrangement, it’s advisable to check your contract and consult with your HR department to better understand your entitlements.

When I was applying for my end-of-service entitlements, I realized that a well-crafted letter made a big difference in how smoothly the process moved. The HR officer appreciated the complete format I used—something I wish I had known from the beginning. Writing an application for gratuity isn’t just about putting words on paper; it’s about following the right pattern and guide. One must gather all essential details such as the job’s start and end dates, service duration, and your employee ID card number.

It is crucial to include the necessary documents to accompany your gratuity claim. The HR Department needs a clear and respectful letter, and I’ve found that keeping the tone polite and professional sets the right tone from the outset.

Before you submit your request letter to your employer or company, try using a reliable, user-friendly online gratuity calculator. This tool not only helps you estimate your amount, but it also provides a year-wise breakdown of your expected gratuity with amazing precision.

When I used it, I felt much more confident knowing what I was entitled to. It also helped me structure my detailed letter-writing with accurate numbers. As you explore this step, remember that a clear sample can help you build a better application and give you the confidence to communicate your case well. A strong letter is not only about getting your money—it’s a reflection of your professionalism.

Read More: File a Complaint for Delay in Gratuity.

Application Format of Request Letter for Release of Gratuity Payments

Curious about drafting a gratuity release letter for your boss or recruiting firm? Here’s the full step-by-step guide with a sample letter to claim gratuity!

To,

The Human Resource Manager,

____________ (Company Name)

____________ (Address)

_/_/____ (Date)

Subject: Request for Gratuity Payment

This is to inform you that my name is ____________. I have worked at your firm as ____________ for ____________ (job duration) with employee ID ____________. I have reviewed all official regulations and employment law terms concerning workers’ rights to end-of-service benefits and found myself qualified for the gratuity entitlement. Therefore, I sincerely request you to process my gratuity claim as per due procedure.

Awaiting your kind acknowledgment!

Regards,

____________ (Name)

____________ (Signature)

Sample Letter to Claim Gratuity Fund Upon Resignation

To,

The HR Admin,

Company Name ____________

Address ____________

19/6/2025

Subject: Request for Gratuity Payment

Sir/Madam,

In accordance with the Gratuity Act 1972, I am submitting this letter to request my End-of-Service benefits earned through my service at your company from ____________ to ____________ (Job Duration). I have served a minimum of five years in this organization and have formally resigned from my position on ____________ (Service End Date). I have completed all assigned tasks and enclosed all the required documents with this application for your consideration. I sincerely request the prompt processing of my application to finalize the due process. Your kind response will be greatly appreciated to facilitate timely payment. Thank you in advance.

Regards,

____________ (Name)

____________ (Previous Designation)

____________(Contact Number)

____________ (Signature)

also checkout what is the difference between limited vs unlimited contacts.

What does gratuity mean in pay, and how is it calculated? This guide will help you grasp this concept with ease!

What is Gratuity in Salary?

Back when I first started working in a particular organization, I had no idea that something like gratuity even existed. Over time, I learned that gratuity is more than just a monetary benefit—it’s a token of appreciation from employers to employees. It’s typically paid when an employee leaves the company through retirement, resignation, or unfortunately, even death.

This reward acts as a financial cushion during significant life transitions, offering a sense of security for those who have dedicated a big part of their lives to a stable career. In my case, knowing this gave me extra motivation to stay committed and loyal to my employment.

In India, gratuity is not just a goodwill gesture—it’s governed by strict labor laws. The Payment of Gratuity Act 1972 mandates that an employee must have completed at least five years of continuous service with the same employer to be eligible for payment.

However, the requirement is waived if the employee suffers death or disablement, which is a humane consideration. Different countries have varying criteria, but typically, factors such as organization size, nature of employment, and tenure play key roles in eligibility.

As someone who’s navigated these policies firsthand, I can say that understanding the regulations in your country can save you from confusion later on.

Is Gratuity Deducted from Salary?

When I received my first employment offer, one of my immediate concerns was whether gratuity would be deducted from my salary. What I came to understand is that gratuity is actually an end-of-service benefit—a lump sum amount that the employer pays. It’s not something taken from your monthly earnings. However, things aren’t always that simple.

Some companies may structure your contract by showing gratuity as a part of your CTC (Cost to Company). This means that while you’re technically being paid it, the way it’s presented can be confusing. That’s why I always recommend thoroughly reviewing your employment terms before joining any new job. It helps you understand your compensation package in a more transparent and confident way.

How to Compute Gratuity in Salary?

While working in a reputed organization, I learned that either the employee or the company is responsible for paying gratuity—sometimes with or without deductions from the salary, depending on the company’s rules. The amount you receive is calculated using a formula that considers your last drawn salary and the total number of years of service rendered. If you’re working in India, there’s a specific way to calculate this.

Here’s the formula:

Gratuity = Number of Service Years × Last Basic Salary × 15 / 26

Now, your last drawn salary usually includes your basic salary and dearness allowance, but excludes any other allowances or bonuses. The 15/26 factor is interesting—it basically represents 15 days of wages for each completed year of service.

To make this clearer, let’s look at an example. Suppose a worker has served a company for 6 years, and his Last Basic Salary is ₹15,000. When you apply the formula:

Gratuity = 6 × 15,000 × 15 / 26 = ₹51,923

This calculation gave me a real sense of the benefits of long-term service.

Checkout online gratuity calculator UAE

How to Calculate Gratuity in Salary for Employees Not Covered Under the Gratuity Act 1972?

Some companies that are not covered under the Gratuity Act 1972 still offer gratuities to their employees. In such a case, the gratuity in salary is calculated using a slightly different formula:

Gratuity = (15 × Last Basic Salary × Service Tenure) / 30

To make this simple, let’s look at an example. Suppose an employee has worked in a company for 10 years, and his Last Drawn Salary is ₹30,000. When we apply the formula:

Gratuity in Salary = 15 × 30,000 × 10 / 30 = ₹150,000

This alternate method of calculation still honors the benefits an employee is entitled to based on their service.

Some other vital components of gratuity include:

– Dearness Allowance

– Last Drawn Basic Salary

– Other Employee’s Benefits

Understanding these key elements can help you make more informed financial decisions regarding your long-term employment.

Gratuity Computation in Salary in Case of Employee’s Death

In unfortunate cases where an employee dies during service, the gratuity in salary is computed based on the job tenure. The service tenure plays a key role in deciding how much the gratuity would be.

If the service duration is less than 1 year, the nominee is entitled to 2 times the Basic Salary.

If the service is equal to or more than 1 year but below 5 years, the gratuity will be 6 times the Basic Salary.

For those who have served 5 or more years but less than 11 years, the amount equals 12 times the Basic Salary.

If the service tenure is 11 or above but below 20 years, then 20 times the Basic Salary is paid.

In cases of more than 20 years of service, gratuity is calculated as half of the Basic Salary for each 6 months, with a maximum limit of 33 times the Basic Salary.

These structured slabs ensure financial support to the family of a deceased employee based on their dedication and length of service.

Income Tax Policy for Employee’s Gratuity

When it comes to Government employees, one big relief is that no income tax is applicable on the gratuity amount they receive.

For employees working with companies that are covered under the Gratuity Act, 15 days of salary—specifically the last basic salary—is exempted from income tax.

Moreover, these employees are also exempted from income tax on gratuity amounts up to ₹20 lakhs, providing them significant tax benefits upon retirement or end of service.

Read more: Apply for an E Signature Card in UAE 

Wrapping up

Employees must stay aware of their rights and entitlements when it comes to gratuity in salary. It’s essential to track your service tenure, maintain accurate documentation, and actively communicate with your employer regarding the payment of gratuity.

To avoid any confusion or delays, it is highly advisable to review your company’s policies and procedures related to gratuity. Doing so helps ensure a smooth and hassle-free experience when claiming what you’re rightfully owed.

When I first needed to sign an official document in the UAE, I was surprised by how digital solutions like the e-signature card had completely changed the game. Gone are the days of manually printing and signing paper forms.

Now, individuals can carry out business and legal procedures electronically with this advanced electronic card that truly streamlines government processes. The electronic signatures used in the Emirates help ensure compliance with legal requirements, making tasks more secure and quicker to complete.

To acquire your e-signature card, all you need is your Emirates ID and a small fee of around AED 200. When I applied for mine, the process took less than an hour at the electronic kiosk in a government service center. It was part of a broader digital transformation effort across the UAE to simplify how customers engage with various platforms.

This article aims to provide an in-depth overview of the UAE eCard, focusing on the key benefits associated with its possession. From faster service delivery to reduced paperwork, the comprehensive detail offered by these systems shows how much value they bring to modern administration.

Checkout: online gratuity calculator UAE

What is an e-signature Card?

The UAE has introduced the e-signature card as a modern digital tag to enable individuals and organizations to sign documents electronically, eliminating the need for traditional, paper-based signatures. This secure and legally recognized method of signing documents is becoming highly popular across multiple industries in the region due to its convenience and efficiency.

An e-card functions through an embedded electronic chip that contains the cardholder’s fingerprint and credentials. The signatures stored in these electronic cards can appear in different forms—whether symbols, images, or standard signatures—providing flexibility while maintaining authenticity and compliance.

How do you apply for an e-Signature Card in Dubai and UAE?

Residents, owners, certified signatories, and delegates in the UAE can now obtain their digital ID cards through the Ministry of Labor (MoHRE), TASHEEL Service Centers, or other participating enterprises. Here is a detailed guide outlining the complete process and requirements for acquiring this facility in the United Arab Emirates. The entire initiative simplifies identity verification and improves access to digital services for various user groups.

Documents Required

To apply for an e-signature card, applicants must possess several essential documents, including a colored photograph with a white background of the authorized signatory, a valid Identity Card, and a copy of a valid Passport. Additionally, contact details such as a phone number or Email address are required.

If the individual does not have a private phone number on the Ministry’s record, they must open a file as a foreigner to complete the application procedure. This ensures proper identification and a smooth processing experience for all applicants.

Application Procedure

To initiate the application process for eCards in the Emirates, you need to follow a few simple steps. Start by visiting TASHEEL Service Centers or participating establishments to apply for an electronic signature card.

For those opting for the online application, you can access the MoHRE platform by logging in using your username and password or the UAE Pass. Once logged in, simply fill out the application form and submit it via Service Centers or the designated service delivery channels.

The Ministry of Labor’s authorized personnel will then verify your application and all accompanying documents. After successful verification, your request for the E-Signature Card will be officially approved.

Lastly, the Ministry will assign a unique reference number, specific to each inhabitant, which will be recorded for future reference.

also read how to file a complaint for delay in gratuity.

Terms and Conditions for UAE e-Signature Card

The Ministry of Human Resources and Emiratisation typically takes 1–2 working days to issue e-cards. The digital signature card fee in the UAE ranges from 120–200 dirhams, excluding tax and collection charges. While you can access free digital card services through the MoHRE website and Mobile App, certain tax and government fees may still apply.

The authorized signatory must maintain a file with the Ministry for storing their personal identification number. Applicants can track their application status via the MoHRE Android App or the official website. You may also get updates by contacting the Call Center at 600590000, which operates from 8 am to 8 pm daily.

From Where to Renew the Digital Signature Card?

To obtain an E-signature Card for your company in the UAE, you can visit any of the Tasheel Service Centers located nationwide. The Tasheel service representatives will replace your old manual PRO card or internet card, which holds the company’s number and the signatures of the owner and other authorized signatories, with the advanced digital signature card—a more efficient and secure option for business representation.

Legal Aspects of Acquiring an e-Signature Card in the UAE

It is imperative to understand that, from a legal perspective, an electronic signature holds the same validity as a traditional ink signature. In the UAE, the full guideline governing the usage of electronic signatures is defined under Federal Decree law number 46.

Additionally, you should carry an electronic signature generation device along with its corresponding digital certificate. These certificates are issued by authorized service providers and are crucial to the application process.

The possession of these essential documents is especially important during travel, as they substantiate the authenticity of the electronic document, reinforcing their significance in the entire electronic signature process.

Key Benefits of Digital ID Card in the Emirates

Possessing this card completely eliminates the need to visit Customer Service or Customer Satisfaction Centers for fingerprint scanning, significantly enhancing convenience in document authentication processes.

The electronic card also facilitates seamless business operations and ensures the legal validity of various essential procedures. Here’s a detailed overview of its key benefits in the digital world, where time efficiency and security are crucial.

Cost Efficiency

The shift to digital signatures leads to substantial cost savings for businesses by reducing expenses related to printing, courier services, and storage. This allows organizations to optimize their resources and effectively allocate funds to other critical areas of their operation, enhancing overall efficiency.

Enhances Productivity

E-signature cards allow users to sign documents online within a few moments, significantly reducing the time and effort required for manual paperwork. This feature is particularly crucial in business transactions where timely approvals and agreements are essential.

Moreover, this digital card eliminates the need for employees, staff, or clients to visit specific locations to sign contracts physically. Instead, it enables seamless collaboration from anywhere in the world, promoting flexibility and efficiency in modern workflows.

Secures Data and Privacy

Security is a top benefit of the E-Signature Card, which incorporates advanced encryption mechanisms designed to protect the confidentiality and integrity of digitally signed documents. By adhering to robust security protocols, this digital solution ensures that individuals and companies can conduct safe business transactions with confidence.

Improves Accessibility

The facility provided by the e-signature card results in a substantial reduction in the processing time of e-commerce transactions. The signing of each document is significantly expedited, taking only a matter of minutes instead of days or weeks, which enables the swift closure of deals and contributes to increased revenue for the company.

Complies with Legal Requirements

The E-Signature Card aligns with the stringent regulations established by the UAE government. This legal framework guarantees that digitally signed documents carry the same legal weight as their paper counterparts. Furthermore, e-cards in the UAE help reduce the risk of legal disputes and enhance confidence in the legal validity of all e-signed documents.

Improves Collaboration

Electronic signatures significantly improve interaction among customers, companies, and suppliers by enabling the signing of legal agreements more quickly and effectively. Additionally, these digital tags help optimize transaction procedures by fully complying with the Emirates Law, ensuring smooth and lawful business operations.

Read: Is Gratuity Part of CTC

What is a Digital Certificate?

A digital certificate is a computerized document issued to an individual, company, or a specific team, enabling them to access e-signature generation services. Possessing this digital certificate is a legal requirement for utilizing an electronic signature generation device to produce UAE e-cards, ensuring authorized and compliant usage.

Digital Certifications Service Provider Companies (DCSP)

A Digital Validation Service Provider Company (DCSP) consists of a team of certified individuals offering digital certification services for electronic signatures. To apply for a DCSP permit license, applicants must submit their documents to the Telecommunications and Digital Government Regulatory Authority (TDRA).

The TRA mandates the submission of key documents including ownership details and information about the business structure, financial information covering the past two years (or less for a new organization), evidence of insurance coverage providing sufficient protection for their responsibilities, the company’s Memorandum and Articles of Association, comprehensive detail of the applicant’s profession and employment history, and confirmation of their ability to undertake DCSP duties while considering all legal perspectives.

Read More:How to Calculate Jafza Gratuity

Wrapping up

The e-signature card in the UAE serves as a key player in the ongoing digital shift, which simplifies tasks and ensures legal compliance. It acts as a reliable way to contribute towards a more efficient and legally sound business environment, fostering smoother and safer operations.

Back when I started working in the private sector, the biggest question I had was whether gratuity was part of my CTC. Most employees, whether in the government, public sector, or private companies, often ask the same thing.

The answer is actually simpler than it seems—gratuity and CTC are separate. Your Cost to Company (or CTC) includes all the payments and benefits offered by the company, like bonuses and monthly perks, but gratuity stands alone. It’s only paid by the company when you’ve completed at least 5 years of service.

I still remember reviewing my offer letter and noticing how CTC was calculated—no mention of gratuity funds. That’s because gratuity is a reward for completing long-term service, and it’s handled separately from what you get each month in your salary.

So, while it’s deeply tied to your employment, it’s not bundled into your CTC. If you take a detailed look into any offer letter or HR policy, you’ll find that the topic is clearly outlined once you know where to look.

Checkout: gratuity calculator UAE

What does CTC Mean?

When I first heard the term CTC, I didn’t realize it was just an acronym for Cost to Company. It simply means the total compensation a company pays its employees over one year. The structure sounded confusing at first, but once I joined a firm and got my offer explained, I understood how it works.

Your CTC is usually calculated by adding all the additional benefits to your total salary. It includes both monetary and non-monetary salary components, especially as defined under the Indian Payroll System. This is where the confusion with gratuity comes in.

The gratuity amount is often figured as a portion of your basic salary and can sometimes be shown as a part of the CTC, especially as a perk for long-term employees. However, not every company treats it the same way—some list it separately, others include it. I’ve seen both in my career, and it really depends on how transparently your employer structures the offer.

Read More: How to Calculate Jafza Gratuity

What are the Basic Components of CTC?

Typically, the full CTC value is determined using these listed components:

Direct Benefits

From my experience working in HR for a mid-sized firm, I’ve seen how direct benefits are paid to employees every month along with their salary. These benefits form the regular part of your income and are essential for managing day-to-day expenses.

The basic salary of an employee is the foundation of these benefits, which also include several allowances such as Medical, House Rent, Transportation, Leave & Travel (LTA), and Dearness allowance (DA). These components vary from company to company, but they usually make up a significant part of your CTC breakdown.

Indirect Incentives

In my early career, I was surprised to learn that many employees get certain perks from the company without making any direct investment. These are not visible like monthly pay but still carry significant monetary value, contributing silently to your overall CTC amount.

The payment for these incentives is done indirectly, which is why they’re known as indirect benefits. Some of these hidden gems include Tax Savings, Loan Schemes, Life Insurance, Leased Accommodation, and Company-sponsored food plans. These are often overlooked, but once you calculate them, you’ll see how they really enhance the total worth of your compensation package.

End-of-Service Benefits

Covers gratuity and provident fund and these perks are given to the employee upon completion of his contract.

Is Gratuity Considered Part of CTC in 2025? What is Gratuity Percentage in CTC?

During my time working with HR teams under Indian Employment rules, I came to know that gratuity is considered a legal right of an employee. It’s usually not a part of CTC and is calculated apart from the monthly pay. But around 2000, some companies began adding gratuity into the CTC package to boost employee retention rate. This made sense from a policy standpoint even if it wasn’t traditionally followed.

Now, including gratuity in CTC isn’t a violation of any law, legally or morally, especially when the employee hasn’t made a financial contribution to the working organization. I’ve reviewed cases where companies added it transparently, and it did help reduce turnover.

In fact, the total gratuity is compulsory for Private Limited Companies in India under the Company Act. Since gratuity payment is only given once employees complete 5 years of job with an organization, it’s usually not included in CTC from the beginning of the appointment.

For instance, your hiring company may deduct 4.81% of your salary as a gratuity fund, payable at the end of your service tenure of at least 5 years. While this annual deduction might seem like a part of CTC, you’re only entitled to it if you complete your term. If you’re terminated or resign earlier, you won’t get the gratuity, but the deducted amount may be returned to you as an ex-gratia payment.

Checkout:What is Limited vs Unlimited Contracts

CTC Calculation Formula with Example

Cost to Company (CTC) = Gross Basic Pay + Extra perks or allowances (health coverage and PF portion)

Salary Components	Type of Incentive in Salary Package	Payment
Basic Salary	–	100,000
Allowances	House Rent	35,000
	Medical	10,000
	Dearness	30,000
	Conveyance	10,000
Gross Pay		1,85000
Other Benefits	Medical Insurance	3500
	Provident Fund (12% of basic pay)	12,000
Total Benefits		15,500
Total CTC Amount		200,500

Gratuity Deduction from Salary: Is it deducted from Monthly Pay?

I’ve worked in payroll long enough to see how the gratuity amount is often deducted directly from an employee’s monthly salary, which includes both basic pay and additional allowances. That’s why the gratuity sum heavily depends on the monthly pay structure maintained throughout your employment.

According to the Payment of Gratuity Act 1972, the gratuity is approximately 4.81% of your basic pay. One straightforward formula often used for gratuity calculation within CTC is:

Gratuity amount = 15/26 × Last Basic Salary × Total Number of Service Years

If you’re looking to compute your end-of-service gratuity, using an online gratuity calculator is the best way. It’s a free, handy tool that can assist employees in checking their estimated gratuity amount in just a few seconds.

The calculation is based on your total years of service, your basic pay, and even your contract types, making it quick and reliable.

Is Gratuity and CTC Taxable?

From my experience discussing salary structures, a person’s gratuity is generally treated as part of their pay and is legally taxable. However, the government often provides tax exemptions on gratuities based on the total gratuity amount or specific situations.

Under the Provision of Income Tax Act 1961, some allowances may be either partially or fully exempt from tax. Meanwhile, an employee’s CTC or monthly salary is always taxable, which means taxes are deducted as per the rules on these amounts.

Does Gratuity Inclusion in CTC Mandatory in India?What the Law Say?

From my professional observations, Cost to Company represents the total expense a company bears for employing someone, but it’s not always the exact salary disbursed to the employee. On the other hand, Gratuity is computed based on the employee’s final drawn salary, which generally includes basic pay and DA.

In India, there is no legal obligation to include gratuity in CTC, though many companies opt to incorporate gratuity within the CTC to enhance the attractiveness of their compensation package.

Still, if an employer deducts an amount labeled as gratuity from the salary, it can be reclaimed, but not as gratuity, even if the employee leaves before completing five years of service.

Is Gratuity Considered Part of CTC in Accenture, TCS, and Cognizant?

Based on my experience with Indian payroll systems, if you are an Indian employee, your gratuity amount is generally not included in the Cost to Company (CTC), no matter which organization you work for. Even major top companies like Cognizant, Accenture, and TCS clearly don’t consider gratuity as part of the Cost to the Company.

Does Inclusion of Gratuity in CTC Impact Employee’s Monthly Salary?

In my experience with payroll, including gratuity in the CTC can affect an employee’s monthly salary since it forms a part of the overall compensation package. However, the impact on your monthly take-home pay really depends on how the employer chooses to structure the CTC.

Although the gratuity amount is factored into the CTC, the actual payment only happens after you meet the eligibility criteria, typically after completing a certain period of service. So while it definitely influences the overall compensation, it doesn’t necessarily increase the monthly salary directly but rather affects the total remuneration over time.

Conclusion

From what I’ve seen, the question “Is gratuity part of CTC?” goes beyond simple accounting semantics and involves understanding the complexities of the entire employment package. Although gratuity inclusion in CTC impacts your overall compensation, it doesn’t necessarily mean a direct boost to your monthly paycheck.

If you have any queries, feel free to contact us for a discussion — we’re available 24/7 to help you with solving problems related to this.

Having worked closely with multiple business partners in the Jebel Ali Free Zone Authority, I’ve come to realize how important it is for both employers and employees to understand the rules surrounding gratuity in Jafza. This hub in the Middle East is not just a strategic location for international trade and investment; it’s also a place where knowing the legal regulations around end-of-service benefits can make a huge difference.

Many employees, especially newcomers, don’t realize that the UAE Labor Law mandates gratuities based on the length of service and final salary, and that they can get a quick estimate using the End of Service Calculator available online.

What makes Jafza’s process unique is how efficiently the calculator works. From my experience, it provides real-time insights into your gratuity entitlements, which can be a game-changer when planning long-term finances or negotiating your next contract.

This article aims to simplify how these regulations apply in real situations. Whether you’re a new employee in Jafza or an employer trying to stay compliant, using the online tools and knowing your rights under the UAE Labor Law ensures you’re on the right track.
If you are working in Dubai, then you may also check the UAE End of Service Calculator online.

Jafza Gratuity Rules and Eligibility Criteria

Over the years of consulting within the Jebel Ali Free Zone Authority, I’ve worked with several Jafza companies where understanding gratuity has been vital for both employees and management. Jafza Gratuity Rules are tied directly to end-of-service benefits and are designed to protect the rights of employees under UAE Labour Law.

These regulations clearly state that once an employee completes their service, they are entitled to gratuity payments, which serve as a form of financial security whether they decide to retire or quit.

From my perspective, applying these rules fairly across different company structures within Jafza fosters trust and stability. The emphasis on fairness in payment and clarity in governing procedures ensures that every eligible employee receives what they’re due.

These structured benefits not only support the individual’s post-employment life but also align with broader business ethics practiced in this growing economic zone.

Gratuity Limit

One crucial point I always emphasize when advising employees in Jafza is the maximum cap applied to gratuity payouts. According to the rules, no matter how long your tenure or duration of service may be, your gratuity payment cannot go beyond the value of two years of your basic salary.

I’ve seen cases where long-serving employees expected more due to their extended years, but the predefined limit stands firm.

Even if the calculated amount exceeds this threshold, what’s actually paid out is still restricted. This constraint ensures that there’s a consistent, fair application of the rules. As an advisor, I always tell clients that while service matters, knowing your cap gives you a clear picture of what to expect financially at the end of employment.

Gratuity Rules on Resignation

From my experience advising new hires in Jafza, one of the most misunderstood aspects is gratuity eligibility when leaving the job early. As per established UAE regulations, employees become ineligible for gratuity payment if they resign before completing one year of service. I’ve seen many professionals caught off guard by this rule, assuming partial payouts were possible.

It’s important to clearly understand that this isn’t flexible—this regulation firmly defines the eligibility threshold. So, if you’re planning to leave your position early, especially within your first year, it’s wise to reconsider if your gratuity matters in your financial planning.

Gratuity on Job Termination

One thing I often stress when mentoring professionals in Jafza is understanding when gratuity entitlement can be legally denied. According to Article 44 of the Labor Law, employees who are terminated due to serious misconduct or grave violations of company rules lose their right to any gratuity.

I’ve seen unfortunate cases where employees weren’t aware of this and ended up with nothing post-termination—knowing the consequences of disciplinary actions is absolutely essential.

In other cases, when termination is not the result of dismissal or isn’t employee-initiated, the employer has another obligation—they must cover the airfare to the employee’s home country’s nearest international airport. This rule ensures that, despite job loss, basic post-termination rights and support are honored.

checkout this: How to File a Complaint for delay in Gratuity

Case of Employee’s Death

In the unfortunate case of an employee’s death, their family has the right to claim the gratuity amount under defined procedures

Deductions from Gratuity Amount

During my time working with both HR departments and employees in Jafza, one question that comes up often is about deductions from the gratuity sum—especially when outstanding debts, advances, or loans are involved. According to the law, gratuity is treated as a separate entitlement, and employers are not allowed to deduct such dues from the final payout.

That said, employers do have the right to take legal avenues to reclaim any pending amounts through court or other means. But these cannot be offset directly from the gratuity, making it clear that the final benefit is protected by regulation. This rule is often a relief to many exiting employees, ensuring financial security during transition.

Minimum Service Requirement

Having worked extensively within the Jebel Ali Free Zone Authority (Jafza), I’ve found that understanding gratuity entitlements based on contract types is crucial for both employees and HR professionals. In Jafza, employees become eligible for gratuity payments after completing one year of continuous service, and this rule applies consistently across the UAE. However, the criteria for qualifying can vary depending on whether an individual is on a limited or unlimited contract—especially in the event of termination.

For those on unlimited contracts, employment dismissal doesn’t affect gratuity eligibility, as long as the employee has completed a year of service. But for limited contracts, resignation before the one-year mark results in no end-of-service benefits. Interestingly, if the employer ends the contract before a year passes, they are still required to provide the gratuity under statutory requirements. This distinction is often overlooked, yet it plays a critical role in post-termination planning.

Companies based in Jafza are required to fully comply with these rules to prevent legal issues and uphold strong ties with their employees. Violations may lead to fines and harm.

Hence, companies must keep informed of any changes to the regulations and guarantee precise calculation and prompt distribution of gratuity amounts.

if you’re confued about what is limited vs unlimited contacts is then checkout our complete guide on it here.

How to Calculate Gratuity in Jafza? How Does Online Jafza Calculator Work?

In my experience working with companies registered in Jafza and other free zones, adherence to the gratuity laws set by the Ministry of Labour (MoL) in the United Arab Emirates is fundamental to ensure that end-of-service benefits are properly granted to employees. To make this process simpler, Dubai Trade, which is the service division of Jafza, has developed a user-friendly calculator that helps businesses accurately estimate the gratuity amount their employees deserve when leaving their job.

To get the most from the Dubai Trade calculator, employees need to input key information such as the type of employment contract they have (whether limited or unlimited), the reason for leaving (including resignation, termination, or retirement), their service duration based on joining and leaving dates, and their basic salary. I have advised many clients to keep these details handy, as it ensures precise and timely calculation of their dues.

Why Should I Use Online Jafza Gratuity Calculator?

From my professional perspective, the Jafza Gratuity Calculator is an innovative online resource created by Dubai Trade to make the often complex task of computing gratuity for employees at the end of their employment much simpler. This tool operates in accordance with Article 139 of the UAE Labour Law, guaranteeing that gratuity payments are calculated with strict adherence to legal standards.

By automating the calculation process, this calculator helps streamline business operations, saving both time and resources. Many businesses have reported improved efficiency and accuracy in managing their end-of-service obligations thanks to this valuable digital solution.

The outcomes produced by the online Jafza Freezone Gratuity Calculator are approximations requiring final validation from Jafza’s Labour Affairs Section.

When I first looked for a job in the United Arab Emirates (UAE), I was confused about the employment contracts and how they affect one’s career and future. The legal terms around limited and unlimited contracts seemed complex, but understanding these details made things clearer. As someone now working in the region, I’ve learned that knowing your employment structure isn’t just helpful — it’s essential.

According to the updated Labor Law, all employers in the UAE were required to convert their employee’s unlimited contracts into limited contracts by February 2023. The law now allows limited contracts to run for a duration of 2-3 years, and they can be renewed depending on your service period.

These changes in contract types provide employees more clarity on their rights and responsibilities, especially when planning long-term work goals. Having this knowledge early on truly helps in making informed decisions and securing a stable future.

Checkout: Gratuity calculator UAE

Limited vs Unlimited Contracts in UAE 2025: What are the Key Differences?

Under the UAE Labor Law, I discovered that an employer or a hiring company can offer two main contract types to their employees — limited and unlimited contracts. When I received my first offer in UAE 2023, it came with an explanation of both.

I learned that each has distinct conditions based on job structure, service duration, and service rules, which directly influence benefits like gratuity entitlements and other legal rights. This clarity helped me choose the type of contract that suited my goals and long-term plans.

What is a Limited Contract in UAE?

When I first signed a Limited or Fixed Term Employment Contract, it clearly outlined a specified duration during which I was expected to work for the hiring company. The employment began on a start date and ended on a specific end date, and the total work duration under limited contracts could vary depending on factors like the employee’s UAE residency, company’s rules, nature of job, project length, or even the employee’s salary.

I learned early that once my service end date arrived, if I didn’t renew my contract, it could be canceled at any time — a reality of working under a fixed-term contract that everyone should keep in mind.

One crucial thing I understood later was from Article 38 of the New Labor Law UAE 2022. It laid down how contract renewal should happen: through mutual agreement between the employer and the worker. Once renewed, the contract becomes an extension of the previous contract with the same legal terms, and that extended contract period gets added to your total service years. This gave me confidence to negotiate terms more wisely when I considered renewal.

What is an Unlimited Contract in UAE?

When I first came across an unlimited contract, I appreciated the flexibility. It wasn’t tied to any fixed working duration, and neither the employee nor the employer was bound to work together for a specified time. This made it ideal for those who valued freedom on both sides, as the setup was quite flexible for both parties involved. However, everything changed when the New Labor Law in the UAE was declared.

Under the updated regulations, unlimited contracts are no longer applicable. All employers were required to switch their employees from unlimited contracts to fixed-term contracts by February 2023. I personally went through this transition, and it was a major shift in how job agreements are structured here. It’s a change that now defines the professional landscape in the UAE.

Difference Between Resignation/Termination Rules for Limited vs Unlimited Contracts in UAE

Resignation and Termination for Limited Term Contract

As an employee, I once had to resign from a limited contract job, and it was essential to understand Article 121 of the Labor Law. It explains that contract termination under such agreements should occur with the mutual consent of both parties. Still, if either side, especially the employee, wants to exit before the project concludes, they must give written notice ranging from 1-3 months. I had to plan my departure carefully to stay compliant with this regulation.

There’s a different rule if you’re resigning during probation. If I had chosen to leave the country, a 14-day notice was required. But if I wanted to shift to another company, the law demanded a 30-day notice. Moreover, Article 38 of the New Labor Law UAE 2022 again reinforced that a limited contract has to comply with certain rules, which helped ensure both sides followed a fair and legal process during any employment transition.

Resignation and Termination for Unlimited Contracts

Under the UAE New Labor Law, resigning from an unlimited contract involves specific responsibilities for both the employer and employee. Both can terminate the contract by giving a prior notice of 30 days. However, if either party violates Article 120 or 121 of the UAE Labor Law, they may end the contract without serving a notice period. From my own case, understanding this clause helped me avoid an unexpected legal issue.

If someone wants to discontinue work instantly without prior notice, they must pay compensation equal to 30 days’ salary to the other party. Once, a colleague of mine had to do this, and it was financially tough. If the employee proves innocence, the hiring company is required to pay all pending dues and gratuity entitlements.

In contrast, if the employer fires a worker for reasons outside those listed in Article 120, they owe the employee 3 months’ gross salary and all pending dues. Likewise, if an employee quits without reasons supported by Article 121, they must pay 6 weeks of gross salary or settle all remaining dues with the hiring company. These rules make it vital to understand every exit path before making a move.

If you’re strugging to file a complaint against delay in you’re gratuity checkout our article on it here.

Gratuity Calculation for Limited vs Unlimited Contracts in UAE

It’s important to know that under the New Labor Law of the UAE, all contracts were required to switch to fixed terms before February 2023. I went through this change myself, and after this transition, I noticed that gratuity is now calculated the same way, whether you’re under limited or unlimited contracts. This shift has streamlined how end-of-service benefits are handled for everyone.

Gratuity Calculation for Limited Contract

Under the Old Labor Law in the UAE, I found that limited contract gratuity or end-of-service benefits were calculated differently based on the length of your service years. If you worked fewer than five years, you’d receive 21 days of your employee’s basic salary per year. But for more than five years of service, the benefit increased to 30 days per year. This distinction helped me understand the long-term value of staying in one role under a limited contract.

Gratuity Calculation for Unlimited Contract

When it comes to unlimited contracts in the UAE, I realized that gratuity is calculated differently depending on the employee’s job leaving pattern—whether it’s resignation or termination. During my own research, I found that the gratuity estimation upon contract termination matches the rules of limited contracts. But when it comes to resignation, the formula changes significantly.

If an employee resigns after 1-3 years, seven days of basic wage is used to compute the gratuity. For 3-5 service years, it becomes 14 days of basic wage, and for anything more than five service years, the calculation is based on 21 days of basic wage. These breakdowns matter a lot when planning your exit or estimating your dues accurately.

How to Calculate End-of-Service Gratuity if the Employee Resign?

From my experience, if an employee working under a limited-term contract decides to resign before completing 5 years of service, they are generally not entitled to end-of-service benefits. However, once they have served more than 5 years, their gratuity is calculated just like those working on unlimited contracts.

For unlimited contracts, the end-of-service gratuity calculation varies depending on the years served: between 1-3 years, there is a 2/3 reduction; for 3-5 years, a 1/3 reduction applies; and for those who served above 5 years, there is no reduction. Understanding these rules helped me plan better for my career transitions.

How to Calculate UAE Gratuity if the Employer Terminates a Contract?

Based on my understanding, when an employee completes one full year of service under a limited-term contract, they become entitled to gratuity benefits under certain conditions. For the first 5 years, the benefit is 21 days of basic salary for each year, while for more than 5 years of service, it increases to 30 days for every additional year. But it’s important that the employee is not involved in any company misconduct or property loss to receive these benefits.

For unlimited contracts, the UAE gratuity is calculated differently when terminated by the employer: between 1-5 service years, the payout is 21 days of basic pay, and for above 5 years, it’s 30 days of basic pay. However, the total gratuity amount must not exceed two years of pay. This rule helped me better estimate what to expect in case of job changes.

Conclusion

In my experience, the unlimited-term contract is quite flexible and is frequently used across the UAE, especially for long-term or permanent jobs where employees are unsure about the exact duration of their project. Conversely, a limited contract tends to work best when employers require short-term collaboration with workers on projects that have a known end-date. This difference really helps clarify what kind of contract suits your career plans.

When working in the UAE, many employees are not fully aware that they are entitled to gratuity payments as part of their end-of-service benefits after completing a one-year contract with their company.

I learned this the hard way when my employer fails to fulfill their obligation of paying my dues within the legally allowed 14 days of termination. The Law under the UAE Labor system treats gratuity as a fundamental aspect of employment agreements, making it clear that workers have the right to act if something goes wrong.

This article explores the specific provisions in UAE Labor Law that provide insights into the process to file a complaint against an employer in the event of a delay in gratuity payment.

The way to address this issue starts with understanding your legal standing and ends with submitting your grievance to the Ministry of Human Resources. Knowing how to navigate this procedure gives you the power to protect what you’re owed.

if you want to calculate you’re gratuity click here to check you’re gratuity.

What Does the UAE Labor Law Say? Understanding the Relevant Articles

Article 51

Expatriate workers who are completing one year of continuous service are entitled to end-of-service benefits according to the outlined rules. These rules include the last due basic pay of 21 days per year on completing 5 years of service, and 30 days per year when working for more than 5 years of service.

The gratuity is calculated as mentioned above, provided that the total amount should not exceed 24 months. Additionally, unpaid absence days shall not be counted in the gratuity payment.

Article 53

In the event of contract termination, whether initiated by the employee or the employer, it is mandated by the UAE Labor Law that gratuity payments must be settled within 14 days from the date of termination. This legally binding timeframe underscores the importance of a prompt and fair settlement of employee entitlements.

Article 53 of the Labor Law states that if the employer fails to proceed with the employee’s application for gratuity payments within 14 days of the end of the service contract, the employee should file a labor complaint against him.

How to File Complaint for Delay in Gratuity Payment: Step-by-Step Guide

Prepare Legal Documents

When I faced a delayed gratuity payment issue in the UAE, the first smart step I took was to collect all relevant legal proofs. These included my employment contract, submitted applications, and every communication I had with my employer—especially records that clearly showed my attempts to communicate the problem.

It’s essential to express your concerns clearly and reference the specific articles of the UAE Labor Law that govern such entitlements. I learned from experience that keeping everything in one place helped speed up the complaint process. Without organized documentation, you risk getting lost in the system. So, make sure every piece of paperwork is accounted for and nothing is missing before moving forward.

Read the Terms and Conditions of Contract

When I had to submit my application for a delayed gratuity entitlement, the first thing I did was go back and thoroughly review my employment agreement. I didn’t want any misunderstanding or inconvenience, especially if the case went to legal court.

I made sure I understood all the terms and conditions related to my rights. What really helped was checking if I met the eligibility criteria as clearly stipulated in my contract. Trust me, this step can save you a lot of time and stress—if you know what your entitlement is, you’ll be much more confident when you confront your employer or take the matter further.

Check Applicable Law Articles

From my experience, the most important step before filing a complaint for delayed gratuity payment is to research and understand the labor laws and regulations that apply in the UAE. Knowing the exact legal rights gives you the confidence and power to handle the situation correctly. The specific articles of the law related to gratuity clearly define what you’re entitled to and how disputes should be settled. Usually, labor departments or employment tribunals are the places that deal with these complaints, so being familiar with the rules makes the process much smoother and less intimidating.

Submit a Complaint to the Ministry of Human Resource and Emiratization

When talking with your employer doesn’t solve the problem, you need to take the next step and submit a complaint to the Ministry of Human Resources and Emiratization (MOHRE). From my experience, gathering all the necessary documentation and clear proof of the gratuity denial is key before you file. You can do this in several ways: call the Ministry’s helpline number 80060, or easily file an online complaint by visiting www.mohre.gov.ae, or even download their App and fill in the required details. This flexibility made the process more manageable for me, especially when I was unsure about the formal steps.

If you and your employer can’t reach a friendly solution, MOHRE steps in by issuing a letter that starts legal proceedings in a Labor Court. It’s important to know that the computation of your benefits is done based on your final remuneration at the time of termination, and this calculation excludes any allowances or non-monetary benefits. Understanding this helped me stay focused and prepared throughout the complaint process.

Conclusion

Understanding your rights under the UAE Labor Law is crucial when dealing with a gratuity denial. From my experience, following the 14-day rule strictly and taking all proactive steps as outlined in the labor law helps you handle the situation professionally and effectively. Staying informed about your entitlements and acting quickly makes the complaint process smoother and increases your chances of a successful outcome.