Gratuity Calculator | How to calculate gratuity in UAE in 2024

Gratuity calculation for those with limited contracts

An expat employee who worked less than a year of their government-approved contract, whether he resigned or got terminated, will not receive any gratuity pay.

If an employee provided anywhere from 1 to 5 years of service, then he or she will receive full gratuity pay based on 21 days of basic salary for every year of service rendered. 

If an employee has completed over 5 years of service, he will receive full gratuity based on 30 days of basic salary for each year of work. 

Here’s how to compute:

• Identify the daily rate by dividing the monthly wage by 30
• Multiply the daily rate by 21 or 30
• The result is the amount the employee will receive for each year of service

Example:

If the monthly wage is AED10,000 and the employee has rendered 4 years of service. Given the formula, “(Monthly wage ÷ 30) x 21,” the amount the employee will receive for each year of service is AED6,999.30. 

Please note that in all scenarios previously mentioned, the total gratuity an employee will receive should not exceed 2 years of his or her total wages, based on the basic salary, regardless of length of service.

Gratuity calculation for those with unlimited contracts

As in the case of workers with limited contracts, those who have not completed a year of service are not eligible to receive gratuity.

Those who have completed anywhere from 1 to 3 years will receive total gratuity that is one-third (1/3) of 21 days’ worth of salary. The formula for total gratuity is “Daily rate x 21 days x 1/3”. The daily rate is the monthly wage divided by 30.

For those who completed employment of between 3 to 5 years, the calculation of gratuity pay is two-thirds (2/3) of 21 days’ salary. In this case, total gratuity pay’s formula is “Daily rate x 21 days x 2/3”.

For those whose service ended after five years, full gratuity pay will be based on a 21-day salary multiplied by the number of years of work. Hence, gratuity pay computation is “Daily rate x 21 days x service period.”

Example:

Assuming a monthly wage of AED10,000, an employee who rendered 4 years of employment can compute his gratuity using the formula, “(Monthly wage ÷ 30) x 21 days x 2/3”. His gratuity pay will be equivalent to AED4,666.20 for each year of his service

No gratuity payment

Article 139 of the UAE Labour Law states that an employee may not get gratuity payment if:

• He or she gets dismissed from service for any of the reasons outlined in Article 120. Or, if the employee quits only to avoid being dismissed in accordance with the article.
• He or she resigns without notice in cases other than the ones set in Article 121 (if an employer breaches contract or in case of assault), and such with regards to unlimited contracts; or before the completion of five years of continuous service in limited contracts.

Get your gratuity benefits

Make sure that you understand the benefits you are entitled to, whether you resign or lose your job under any other circumstances. Your gratuity pay can help during your job search or as a means to support you during retirement.