The expatriate workers in UAE are entitled for end-of-service gratuity as per rules. The workers must have worked for minimum one year under the same employer to become eligible for gratuity in the United Arab Emirates.

The foreign citizens come to Dubai, Abu Dhabi and other Emirates to stay & work to earn money for their family. The private sector companies hire foreign citizens on contract basis and provide salary plus allowances/perks and end-of-service benefits.

Points to Consider for Gratuity Calculation in UAE

The UAE Labour Department has created Labour Law to regulate the employment system and provide necessary benefits to foreign workers in the country.

There are some key points that you must consider for gratuity calculation in UAE, the points are as follows;

• The end-of-service gratuity is calculated based on the last basic salary of the employee.
• The basic salary does not include any allowances, perks or additional benefits offered by the employer.
• The employer must calculate gratuity of the employee as per the Official Gratuity Formula given by the Labour Law in UAE.
• The calculation of gratuity must be done correctly with help of the employee’s basic salary, contract type, employment end type and the total service period.
• The total payable gratuity amount must not exceed two years’ salary of the employee.

Gratuity Settlement Rules in UAE

1. All foreign workers/employees in private sector are entitled for gratuity if they have completed minimum one year of continuous service under the same employer/establishment.
2. The employer must calculate gratuity as per rules and settle all pending payments (salary, allowances and gratuity) to the employee in 14 days of employment termination.
3. The worker can file a complaint to the Labour Department if the employer does not pay gratuity on time or denies to pay the gratuity even if the worker is eligible as per law.
4. If the employer has terminated the worker for disciplinary reasons, the worker is Not entitled for gratuity.
5. If the worker has caused damage to any property of the employer/company, the worker is Not entitled for gratuity.
6. If the worker owes money to the employer, the employer can deduct it from gratuity of the worker and pay the remaining amount to the worker.
7. If the worker is terminated for being unable to do the basic work mentioned in their job profile, the employer can disqualify the worker from gratuity.
8. If the worker has an absconding case (run away from work without notice), the worker is Not entitled for gratuity.
9. If the worker is involved in illegal activities and/or arrested by the police, the worker is Not entitled for gratuity, salary or any other allowance from the employer.

Gratuity Calculate Rules in UAE 2024

The gratuity calculation rules are different for limited contracts and unlimited contracts. So, it is important to know the employment contract type before calculating gratuity of a worker in the UAE.

There are four important factors that are used for calculating gratuity in UAE.

1. Employee’s Last Basic Salary
2. Contract Type
3. Employment End Type
4. Total Service Period

With above factors, the rules for gratuity calculation in UAE are as follows;

Gratuity Calculation Rules in UAE 2024
On Resignation or Termination	Limited Contract
For Less than One Year of Service:	No Gratuity
For 1 to 5 Years of Service:	21 Days Basic Salary for Each Completed Year
After 5 Years of Service:	30 Days Basic Salary for Each Completed Year from 6th Year
On Resignation	Unlimited Contract
For Less than One Year of Service:	No Gratuity
For 1 to 3 Years of Service:	7 Days Basic Salary for Each Completed Year
For 3 to 5 Years of Service:	14 Days Basic Salary for Each Completed Year
After 5 Years of Service:	21 Days Basic Salary for Each Completed Year up to 5 Years30 Days Basic Salary for Each Completed Year from 6th Year
On Termination	Unlimited Contract
For Less than One Year of Service:	No Gratuity
For 1 to 5 Years of Service:	21 Days Basic Salary for Each Completed Year
After 5 Years of Service:	30 Days Basic Salary for Each Completed Year from 6th Year

So, you can consider the above table to calculate gratuity of any foreign worker/employee in the UAE. In case you want to calculate gratuity without formula, you can use the Gratuity Calculator UAE as an online tool to calculate gratuity efficiently.

Conclusion:

The gratuity calculation rules are enforced by the Labour Law in UAE. All the employers and the employees must follow the gratuity rules and calculate end-of-service gratuity by using the gratuity calculation formula given by UAE Labour Department.

I have shared all important rules regarding gratuity calculation and settlement in the UAE. I hope that you have gained all required knowledge about how to calculate gratuity for limited/unlimited contracts for expat workers.