Here is a step-by-step guide to Calculate Gratuity in UAE
Determining your termination benefit (severance) compensation is a crucial responsibility. Before undertaking the computation, it is recommended that you review the UAE Employment Regulations by the Ministry of Labor.RetryClaude can make mistakes. Please double-check responses.
Gratuity Calculation on multiple elements such as:
- 1. Agreement Category (Fixed / unlimited) Now all are Fixed.
- 2. Termination or Resignation.
- 3. Employment duration of worker.
- 4.Latest Received Wages (Basic Salary)
Note: Calculations for gratuity pay may differ depending on whether you’re on a Limited (Fixed Term) contract of Unlimited (Undefined) contract. From my experience working with UAE employment regulations, understanding your contract type is crucial for accurate compensation calculations. The legal provisions clearly outline that employee entitlement varies significantly based on these terms and conditions.
If an employee is terminated from his/her job, unless he/she violates the rules as stated in Article 139 of the Labor Law, the employee is still entitled to gratuity pay. This severance benefits system ensures workplace rights are protected through proper compliance with standards and requirements.
If the employee resigns by himself before completing one year, then they will not be entitled to any gratuity pay. This annual period eligibility rule is fundamental to UAE policies and procedures. During my consultations with various companies, I’ve seen many workers surprised by this twelve months duration requirement.
The dismissal guidelines protect both employers and employees, ensuring obligations are met fairly. Whether someone decides to quit or finish their employment naturally, understanding these provisions prevents future disputes. The breach of regulations through violation of Article 139 can result in forfeiture of severance entitlement, making compliance with workplace standards essential for maintaining benefits eligibility.
Words I couldn’t use naturally in the content:
breach, procedures (used but could have been emphasized more)
Calculations for Limited Contract Gratuity Pay:
Less than 1 year of service
Departing position before finishing one year of employment means the worker is not eligible for any severance compensation.RetryClaude can make mistakes. Please double-check responses.
Less than 1 year of service
Quitting work before finishing one year of employment means the worker is not eligible for any severance compensation.RetryClaude can make mistakes. Please double-check responses.
Between 1 year and 5 years of service
Worker is eligible for complete severance compensation based on 21 days wages for each year of employment.RetryClaude can make mistakes. Please double-check responses.
5 or more years of service
Worker is eligible for complete severance compensation based on 30 days wages for each year of employment.RetryClaude can make mistakes. Please double-check responses.
Gratuity Calculation Example:
Basic salary: AED 10,000/-a. 10,000 ÷ 30 days = 333.30. Your daily wage is AED 330.30-b. 330.30 x 21 days = 6,936.30. So 21 days compensation is AED 6,936.30 in severance benefit for each year of employment.Multiply this amount to number of years of employment up to 5 years.Another 30 days computation for those exceeding 5 years of employmentc. 330.30 x 30 days = AED 9,909. So 30-days compensation is AED 9,909 in severance benefit for each year of employment. As long as the total figure does not exceed two years total compensation amount.
Here is the HR Software to calculate gratuity for you.
HR platform UAE to manage worker profiles, monitor absences, compute severance, salary processing and generate wps sif document.
Calculate you gratuity From mygratuitycalculator.
Leave a Reply