UAE Gratuity Calculator 2025

UAE Gratuity Calculation Guide

End of Service Gratuity is a mandatory benefit for all employees working in the UAE under the UAE Labor Law. Understanding how gratuity is calculated can help you better plan your finances and know your rights as an employee.

What is UAE Gratuity?

Gratuity, also known as End of Service Benefits, is a lump sum payment made to employees when their employment contract ends. This benefit is calculated based on the employee's final salary and length of service, and is mandated by UAE Federal Law No. 8 of 1980 (UAE Labor Law).

UAE Gratuity Calculation Formula

For Limited Contract Employees:

• Contract Completion: Full gratuity (21 days salary for each year of service)
• Resignation:
  • After 1 year but less than 5 years: No gratuity
  • After 5 years: Full gratuity
• Termination by Employer: Full gratuity regardless of service period

For Unlimited Contract Employees:

• First 5 years: 21 days salary for each year
• After 5 years: 30 days salary for each additional year
• Maximum: 2 years' salary equivalent

Who is Entitled to Gratuity?

All employees working in the UAE private sector are entitled to gratuity, including:

• UAE nationals and expatriate employees
• Full-time and part-time employees
• Employees on limited and unlimited contracts
• Employees who have completed at least one year of service

When is Gratuity Not Payable?

There are specific circumstances where an employee may not be entitled to gratuity:

• Dismissal due to disciplinary reasons as per Article 120 of UAE Labor Law
• Resignation before completing one year of service
• Resignation before 5 years on limited contracts (unless specified otherwise in contract)
• Abandonment of work without proper notice

Gratuity Payment Timeline

According to UAE Labor Law, employers must pay gratuity within 14 days of the employee's last working day. Delays in payment can result in penalties and legal action.

Tax Implications

Currently, gratuity payments in the UAE are tax-free for both employers and employees. However, if you're repatriating funds to a country with income tax, you may need to declare this income according to your home country's tax laws.

Frequently Asked Questions

1. Is gratuity calculated on gross salary?

No, gratuity is calculated only on basic salary plus housing and transport allowances. Other benefits like medical allowance, education allowance, or car allowance are not included.

2. Can I get gratuity if I resign before 5 years?

For unlimited contracts, yes, you get partial gratuity. For limited contracts, generally no, unless you complete the contract term or your contract specifically provides for it.

3. What if my employer refuses to pay gratuity?

You can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE) or approach the labor court. Keep all employment documents as evidence.

4. Is there a maximum limit on gratuity?

Yes, the maximum gratuity payable is equivalent to two years' salary based on the last drawn salary.

5. How is gratuity calculated for partial years?

Partial years are calculated proportionally. For example, 1.5 years would be calculated as 1 full year plus 6 months (proportional calculation).

6. Can gratuity be paid in installments?

Generally, gratuity should be paid as a lump sum. However, in some cases involving large amounts, the employer and employee may agree to installment payments with proper documentation.

7. What documents do I need to claim gratuity?

You typically need your Emirates ID, passport, employment contract, salary certificates, and a no-objection certificate from your employer.

8. Does gratuity apply to government employees?

No, UAE Labor Law gratuity provisions apply only to private sector employees. Government employees have different pension and benefits schemes.

Additional Resources

For more detailed information about UAE employment laws and gratuity calculations, visit:

• Ministry of Human Resources and Emiratisation (MOHRE) official website
• UAE Labor Law Federal Law No. 8 of 1980
• Your company's HR department for contract-specific details

Remember that this calculator is a tool to help you estimate your gratuity. For official calculations and legal advice, always consult with qualified professionals or your employer's HR department.