I remember when Mr. Ahmed came to me after he had resigned from a company in Dubai, where he had worked for five years. He was expecting his end-of-service benefits, but his employer withheld his gratuity without any justification.
This situation, sadly, is not new. It’s unfortunately not uncommon in the UAE. In many scenarios, a company not giving gratuity sparks confusion. That’s why understanding your rights, knowing the legal avenues available, and learning what to do in such cases is absolutely crucial.
As someone who has worked in HR compliance, I’ve come across dozens of articles and handled many cases involving end-of-service benefit payment issues. In the private sector, especially for workers under a private sponsor or even domestic workers, gratuity is a legal entitlement.
It typically begins to accrue after the first full year of employment with a company, and is often relied upon as a lump sum pension payout at the end of a job term. But following the COVID developments of 2020, getting what you’re owed has become more important than ever.
To help people like Mr. Ahmed, I often recommend using tools like DubaiHires.com’s custom report generator. It’s a comprehensive calculator that’s freely available and considers factors like your specific circumstances, how you leave or plan to leave your job, your type of employment contract, and even the jurisdiction or freezone laws that may affect your final number.
There can be significant differences in what you’re owed based on your employer’s location, your profession, or whether you were terminated or dismissed for cause. In some areas, this might mean you lose your right to the entire gratuity—yet in two particular freezones, the entitlement to the full payout is protected, regardless of the reason.
I’ve seen workers who work hard for several years get told they are not due a payout, and it’s truly gut-wrenching. However, there are legally valid reasons why an employer may try to block the payout. There are also important scenarios where you may be required to pay compensation upon leaving. So, knowing your rights, as well as those of your employer, helps avoid unpleasant surprises and lets you plan any voluntary departure wisely.
What is the End-of-Service Gratuity Under the UAE Law?
In the UAE, gratuity is a financial right clearly legislated by law, and one that every employer is legally bound to fulfill. The employer owes this amount to the employee if certain specific conditions are met. I’ve handled cases where companies ignored this duty, but the rules are clear.
The employer is obligated to pay the amount not just to the employee, but also to their children, spouse, or parents—those who may depend on the employee—when a contract ends through termination. It’s surprising how many workers don’t know about this protection under UAE law.
The value of the gratuity isn’t random—it is determined by a formula that considers the number of years the employee has served, the reason for termination, and the monthly salary received during that period of employment.
As an advisor, I often stress that a solid record of employment and accurate salary records are key. These numbers help ensure your payout reflects what you truly deserve, especially when things don’t end on good terms.
Common Reasons Employers Withhold Gratuity
Even though gratuity is a legal obligation, I’ve personally witnessed employers trying to withhold it using various justifications. One of the most common is the incomplete service period—if employees haven’t completed at least one year of service, they’re not eligible to receive gratuity at all.
Many people are unaware of this and only discover it during disputes. Another reason arises from termination for misconduct; if an employee is terminated due to dishonesty or a violation of company policies, the employer can withhold gratuity completely.
Another mistake I’ve seen people make is resigning without notice. Skipping the contractual notice period often leads to forfeiture of gratuity, which can be a painful realization for workers who leave in haste.
Additionally, some contracts contain specific clauses that affect gratuity eligibility, especially in fixed-term contracts. It’s not just about how long you’ve worked—it’s also about what’s written in your agreement.
That’s why it’s critical to review your employment contract carefully and fully understand the terms related to gratuity. I always advise clients to consult someone before resigning or signing anything new, because one wrong move can cost you what you’re legally entitled to.
Steps to Take If Gratuity Is Not Paid
If you’re ever in a situation where gratuity is not paid by the employer, and the company is not giving gratuity, don’t panic. I’ve helped many professionals take the right steps when caught in this very problem. The first move is to review your contract—make sure you meet every criteria tied to gratuity eligibility. Sometimes, a missed clause is all it takes for an employer to dodge the payment legally.
Next, try to communicate with your employer. A formal discussion or even a well-worded written request can sometimes resolve the issue before it escalates. But if that fails, you have every right to file a complaint with MOHRE—the Ministry of Human Resources and Emiratisation. Their mediation services are designed to handle such disputes, and many of my clients have successfully resolved their cases through this route.
If mediation doesn’t work, it’s time to seek legal assistance. Engaging a legal expert gives you access to proper counsel and can help you take necessary legal action. In the UAE, the system is there to protect employees, but it often requires you to assert your rights clearly and confidently.
Read More: file you’re complaint for delay in gratuity
Calculating Your End-of-Service Gratuity in the UAE
In many legal texts, end of service benefits, retirement gratuity, and savings gratuity often appear together. While they each suggest a form of financial compensation for a specific reason, our attention here is solely on end of service benefits. These terms overlap in principle, but it’s important to make clear distinctions when applying UAE laws.
For those working in the private sector in the UAE, the value of end of service benefits depends on several things—mainly the duration of employment, wages, and the nature of work. By law, employees are entitled to 21 days’ wages for each year of service, and after five years, they are awarded a full month’s salary for every subsequent year. This system rewards long-term contributions and consistency.
As per UAE law, an employee becomes entitled to end of service benefits upon the termination of their service. This holds especially true for full-time expatriate workers who have completed at least one year or more in service. Understanding this is crucial for any worker planning a departure, especially if they intend to claim their full dues.
What if you’re a part-time worker, job sharer, or someone under a different employment structure? The gratuity calculation differs. It’s based on a ratio: the number of hours stated in the contract, divided by a standard full-time schedule, multiplied by 100 to get a percentage, and then applied to the value of a full-time worker’s gratuity. This method ensures fairness across varying employment models.
In temporary work situations that last less than a year, the end-of-service gratuity doesn’t apply. However, legal articles do cover exceptions—such as in the unfortunate event of an employee’s death, death due to work, or entitlement in situations like unfair dismissal. These details highlight how multifaceted the law can be, especially when different human realities are involved.
In one case I dealt with, a father was claiming the rights of his son who had died due to work. These kinds of scenarios are heartbreaking but legally important. With years of experience navigating UAE law, we are prepared to support you through any challenge that may arise when it comes to claiming your rightful gratuity.
Eligibility for End-of-Service Gratuity in the UAE
Although the UAE Labour Law clearly upholds the right to end-of-service gratuity, there are specific criteria that define an employee’s eligibility. Not everyone qualifies, and it’s equally important to understand the exclusions. An employee must have completed at least one year of continuous work at the workplace to be entitled.
Whether employment has ended due to expiration of contract or the worker has resigned in a way that’s compliant with applicable regulations, they may qualify. Even those who have served for a total period of not less than one year under temporary employment systems can be eligible, provided all conditions are met.
“Does the UAE Labour Law’s provision on end of service gratuity apply to all private workers?”
For those working in the private sector, your applicable law for end of service calculations and payout rules will depend entirely on where your employer is based. From my experience working across multiple zones, I’ve seen how differently cases are handled. If you’re employed in the mainland or in most freezones, the UAE Labor Law No.8 1980, particularly Chapter 2 – End of Service Gratuity, is what governs your rights. But this changes depending on jurisdiction.
For example, if your company operates in DIFC, then the DIFC Employment Law No. 2 of 2019 applies. If it’s in ADGM, then the ADGM Employment Regulations 2015 take effect.
Those working in JAFZA should refer to the Jebel Ali Freezone Rules 2017 Seventh Edition, specifically Section 11.8. Meanwhile, if you are a domestic worker—like a maid or driver—your entitlements are protected under Federal Law no. (10) of 2017 on Domestic Workers, which has its own end of service gratuity formula under Article 26. Keep in mind, even government workers, or those in government institutions like the police or armed forces, follow alternative arrangements that don’t fall under standard labor laws. Each framework requires different handling, so identifying your employment category is critical before pursuing any legal action.
“So if I’m employed in the private sector and work for more than a year, I definitely get some sort of end of service gratuity?”
It’s not necessarily straightforward when it comes to gratuity eligibility—it really depends on where you are employed and the circumstances surrounding your departure. For example, if you work under a limited or renewed-limited (determined) term contract and you resign within your first five years of employment, even after giving notice, you may be not due any end of service gratuity.
This is stated clearly in Articles 138 and 139(b) of the UAE Labour Law. Interestingly, MOHRE legal advisors have pointed out a coding issue in their online gratuity calculator that produces output conflicting with the law. This problem has been flagged for correction.
If you are on an unlimited (open-ended, undetermined term) contract and resign without giving adequate notice, no matter how many years you have worked, you are not due a gratuity payment either under Article 139(b). The law is different in zones like DIFC or ADGM, which have their own courts and labor laws. To help workers navigate these complexities, the DubaiHires.com end of service calculator was created. It handles all these complications and provides detailed explanations to clarify your exact gratuity entitlement.
“So what if I quit my fixed term contract early, do I really owe my employer money?”
When it comes to compensation for contract termination, the situation isn’t always clear-cut. According to Article 116 of the UAE Labour law, the amount a worker may need to compensate the employer for loss due to rescission of the contract generally should not exceed one and a half month’s basic wages. More specifically, the amount of compensation is capped at the wage of half a month for a period of three months or the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract.
However, the more recent Ministry of Labour Decree 765 of 2015 under Article 1 I 4 allows for a higher limit—up to more than double the previous amount, specifically 3 month’s gross wages. This indemnity must be agreed by both parties and cannot exceed the equivalent of three months’ wages.
If a renewal took place before this decree came into effect and the parties hadn’t agreed on indemnification, the three-month gross wages rule applies. When consulting MOHRE legal advisors about this difference, they mentioned they haven’t been updated, and it will be up to the labour courts to rule on the matter.
“So what if I am due an end of service gratuity payment and I don’t resign, how else can the employer not pay me then?”
How you behave at work matters because the longer you stay with a company, the more you risk losing your end of service benefit payment. From personal experience, being careless—like celebrating a client deal a bit too much—can give your employer reason to reduce or refuse payments.
The UAE Labor Law lists nine reasons why your employer can legally withhold gratuity: if the worker assumes a false identity or nationality, submits false certificates or documents, commits an error causing colossal material losses (with the Labor Department notified within 48 hours), or violates safety instructions at workplace—provided these instructions are written, posted, and the worker is notified, even if illiterate.
If the worker fails to perform duties as per the employment contract and ignores a written investigation and warning, they risk dismissal. Revealing company secrets, being convicted by a competent court of crimes against honor, honesty, or public ethics, being drunk or under a narcotic during work hours, committing assault on the employer, manager, or co-worker, or being absent without valid cause for more than twenty non-consecutive days or seven consecutive days are also grounds for dismissal.
Such dismissals happen without notice under Article 120, except during probation. If dismissed justifiably for these reasons, you lose the right to your end of service gratuity payout under Article 139a.
There are exceptions. For instance, being sacked ‘for cause’ in the DIFC freezone, governed by DIFC Law No2 2019, still entitles you to gratuity up to your date of termination under Article 63.(3)(b). The JAFZA rules differ; earlier, they offered less protection to employees compared to the UAE Labour Law regarding gratuity. However, the Court of Cassation ruled that JAFZA rules take precedence over the Labour Law, which benefits the employer. This ruling is discussed in an article by Hadef Partners.
This ruling contrasts with the opinion of Al Tamimi’s senior labour law partners who argue that when there is inconsistency between free zone regulations and the Labour Law, the terms most favorable to the employee prevail. The example cited refers specifically to JAFZA rules and highlights how different interpretations of these laws may influence court rulings.
“What about if I am caught working for another company during my annual leave, will I lose my gratuity if sacked for that?”
According to Article 88 of the UAE labour law, during annual or sick leave, a worker is prohibited from working for another employer. If the employer discovers this, they are entitled to terminate employment without notice and to deprive the worker of wages for the duration of the leave. This is considered termination for cause, but it is not included under the reasons listed in Article 120. Furthermore, Article 139a specifies that losing entitlement to end of service gratuity applies only if sacked for causes mentioned in Article 120.
We consulted MOHRE legal advisors who clarified that despite many law firms’ opinions suggesting otherwise, being sacked under Article 88 does not mean you lose your right to end of service gratuity. The ministry’s legal advisors explained that Article 88 is not covered by Article 139a, so gratuity remains due, although the employer can withhold wages from the leave period.
In contrast, JAFZA employment rules clearly list this behavior as grounds to forfeit gratuity under sections 11.8.4(j) and 11.8.13. This highlights the different interpretations and rules across various jurisdictions within the UAE, adding to the complexity of understanding end of service gratuity rights.
We have pointed out some of these complexities because simple calculation examples found on local newspapers often lack detailed explanations about what you might or might not be owed. For those with questions, mygratuitycalculatoruae.com and using their End-of-Service-Calculator provides a free custom generated report tailored to your particular circumstances, helping you better understand what you are truly owed.
Conclusion
If the company is not giving gratuity, it’s important to remember that the UAE labour law strongly supports employees. Employers are legally obligated to pay end-of-service benefits to eligible employees. If there is any failure to pay, whether your gratuity has been delayed, denied without justification, or completely ignored, you have the right to take action and claim what is lawfully yours through official legal channels.
FAQs
Is gratuity mandatory in the UAE?
Certainly, gratuity is a compulsory end-of-service payment for workers who have served continuously for a minimum of one year.
Can an employer hold my gratuity?
Employers must pay gratuity unless valid legal grounds exist, like dismissal due to misconduct.
What if the company is not giving gratuity?
In this situation, you may lodge a complaint with MOHRE and, if needed, take legal steps through the courts.
How is gratuity calculated?
Gratuity is determined by the final basic wage and length of service, usually 21 days’ pay per year of employment.
Leave a Reply