Gratuity Calculator – UAE

Gratuity is an end-of-service benefit that an employee working in the UAE receives after completing a minimum term of one (1) year in employment. It is a one-time monetary benefit that the employee receives as a token of appreciation for the services in the organization. This amount can be used for making an investment in the UAE. The gratuity amount usually depends on a number of factors, as mentioned below:

Factors that Determine Gratuity:

These are the factors that influence gratuity calculation in UAE.

1. Type of Contract

In the UAE, there are two types of employment contracts – limited contract and unlimited contract. Depending on the type of contract, the rules for calculating the gratuity amount are different.

2. Last Basic Salary

While calculating the gratuity amount in UAE, only the last basic salary drawn by an employee is taken into consideration. All other bonuses and allowances, such as housing, conveyance, overtime, etc., are not included in the gratuity calculation.

3. Duration of employment

An employee is entitled to gratuity only if he completed at least one year of employment.

Please note that the gratuity calculator assumes that there is a continuous service between the period of the first and last working day. In other words, the one-year employment period must not include the time period when an employee was absent from work without pay during his/her period of service.

What is a Gratuity Calculator?

A gratuity calculator is a financial tool that helps employees in the UAE to get an estimation of the gratuity amount they will receive when they quit their job. It is a beneficial tool to ascertain the gratuity amount if you are planning to leave the organization. The gratuity calculator is simple to use and functions on the standard gratuity calculation method used in UAE. As per the UAE labor laws, the gratuity calculation is based on the type of employment contract, i.e., limited contract and unlimited contract. Let us see how to calculate the gratuity amount based on the types of employment contracts in the UAE.

Gratuity Calculation for Limited Contract:

In a limited employment contract, an employee agrees to stay with the company for a certain number of years and set a date. In case the employee resigns before the agreed time period, he/she can get a labor ban imposed on them, lose their labor rights, or even be liable to pay compensation to their employer. The gratuity calculation for the employee in a limited contract will be on the following rules:

  • Less than 1 year of duration – An employee is not entitled to a gratuity amount in case he/she leaves their job before one year of service in the organization.
  • 1 to 5 years of duration – The employee is eligible for gratuity payment on the basis of 21 days of salary for each year of work.
  • 5 or more years of duration – If an employee has contributed to 5 or more years of service, he is entitled to a gratuity of 21 days of salary for the first 5 years of service. Plush 30 days of salary for each additional year after 5 years of service.

Let us take an example to understand this a little better.

Let’s assume that an employee’s basic salary is AED 15,000.

So, their per day wage will be = 15,000/30 = AED 500

To calculate the gratuity amount of the employee, we need to multiply the per day wage by either 21 or 30 ( based on the duration of their service in the company), 500*21 = 10,500. So, the 21 days of salary would be AED 10,500. This amount will be received by the employee for each service year.

Please note that the total gratuity amount for employees working for 5 years or more should not exceed more than the total salary amount of two years.

 

Gratuity Calculation for Unlimited Contract:

In the unlimited employment contract, there is no specific period of years where the employee has to work for the organization. Generally, in this type of contract, an employee has to serve a 1 to 3 month notice period before leaving the organization. The calculation, in this case, will be on the basis of the duration of service.

  • Less than 1 year of duration – The employee is not entitled to any gratuity amount in case of service of less than one year.
  • The duration between 1 to 3 years of service: In this case, the employee is entitled to one-third of 21 days of basic salary for each year of employment.
  • The duration between 3 to 5 years of service: For the period of service between 3 to 5 years, an employee is entitled to two-thirds of 21 day’s basic salary.
  • The duration between 5 or more years of service: In this case, the employee is entitled to 21 days of basic salary for the first 5 years of service and 30 days of basic salary for each additional year.

Here is an example to understand it better:

Let’s assume that an employee’s basic salary is AED 15,000

So, the employee’s per day wage will be = 15,000/30 = AED 500

The 21 days of salary becomes = 21*500 = AED 10,500

Depending on the years of service, one-third or two-thirds of the 21 days of salary (10,500) will be gratuity pay for the employee in an unlimited contract. For employees with more than 5 or more years of service, the 21 days of salary will be calculated for the first five years and additional 30 days of salary for each month after 5 years of service.

How to Calculate Gratuity in UAE using Zimyo Gratuity Calculator?

Follow these steps to calculate gratuity online using the Zimyo gratuity calculator:

  • Enter your last drawn basic salary in the first input field
  • Enter the first working day and last working day in the second and third inputs, respectively
  • Click on the calculate to get your gratuity value within seconds

Gratuity Calculator

Approximate Gratuity: AED 0
Tenure: 0