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Gratuity Calculation as per UAE Labour Law


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UAE Labour Law

PAYMENT OF GRATUITY according to Dubai UAE Labor Law.

A representative who finishes one year or more in persistent administration should be qualified for tip toward the end of the administration. The tip might be computed as takes after:

21 day's wages for every year of the initial five years.

30 day's wages for each extra year on condition that the aggregate of the tip might not surpass the wages of two years.

Tip is ascertained on a yearly premise if the representative has really finished one year of job with the business or more. The day of nonappearance from work without pay might not be incorporated into figuring the length of administration. In any case, if the worker finished a year in administration he will be qualified for a tip for the portion of the year relative for the part of the year he spent in work gave that he has finished one year in persistent administration.

Without preference to what is stipulated by a few laws in the giving of annuities or retirement advantages to representatives, in a few foundations tip for the individuals who are paid month to month, week after week or every day compensation should be computed as takes after:

Fundamental compensation which is taken as a premise for the figuring of tip is what is last gotten by the representative before the end of the business contract. This compensation will be the premise for figuring the tip for every one of the years amid which the representative works for the business ascertained at the rate prompted here above.

A fundamental compensation implies anything got by the representative as a pay barring lodging, transport, voyaging remittances and extra time, family stipends, enthralling recompenses and some other stipends or a reward.

The business might deduct any sum due and payable to the representative to the business from the end of the administration tip and make installment for the parity to the worker. In the event that there is any disagreement regarding installment of tip or sum payable to the business, the matter ought to be put to the Labor office for intervention.

A worker utilized under an agreement for boundless period who surrendered after a nonstop administration of at the very least a year and not over three years is qualified for 33% of the end of administration tip gave above. On the off chance that the time of constant administration was over three years and under five years he is qualified for 66% of the tip.

Where a laborer under an inconclusive term contract relinquishes his work at his own drive after a consistent administration of at the very least one year and not over three years, he should be qualified for 33% of the severance pay accommodated in the first article. Such a specialist should be qualified for 66% of the said severance pay if his ceaseless administration surpasses three years up to five years, and to the full severance pay in the event that it surpasses five years.

Tip is constantly figured on the premise of the last drawn Basic Salary amid your season of end or renunciation. A representative should be qualified for Gratuity at 21 days of Basic Salary for every year of his/her administration.

Tip figuring UAE Labor Law 2012 if there should be an occurrence of Resignation:

1. Tip Calculation UAE Labor Law: Within one year-No Gratuity

2. Tip Calculation UAE Labor Law: More than one year yet under 3 years: 1/third of 21 days fundamental compensation every year of administration.

The following are points of interest with sample:


Essential compensation = AED 10,000 every month

Joining date = 01-01-2010

End date = 31-03-2011

Downright number of days worked = 455 days

Downright number of years worked = 1.25 years

21 days' Basic compensation = AED 6904.1

Compensation every day = AED 10,000*12/365= 328.76

Sum: 21*328.76*1.25 = 8,606.49

Tip Amount: 1/3*8606.49 = 2,868.83

In the above sample if the you have labored for 1 .5 years, (overhauled after blunder informed by Mr. Ali) your aggregate Gratuity will be around: AED 10,500 (however you get 2/third of the aggregate sum if there should be an occurrence of abdication).

3. Gratuity calculation UAE Labour law for More than 3 years but less than 5 years: 2/3rd of 21 days basic salary each year of his/her service.

The following are subtle elements with sample:

Fundamental compensation = AED 10,000 every month

Joining date = 01-01-2008

End date = 31-03-2011

All out number of days worked = 1,186 days

All out number of years worked = 3.25 years

21 days’ Basic salary = AED 6904.1

Wages per day = AED 10,000*12/365= 328.76

Amount: 21*328.76*3.25 = 22,433

Gratuity Amount: 2/3*22,433 = 14,955.75

4. Gratuity Calculation UAE Labour law: More than 5 years

Fundamental compensation = AED 10,000 every month

Joining date = 01-01-2005

End date = 31-03-2011

Absolute number of days worked (31-03-2011-01-01-2005+1)= 1916 days

Absolute number of years he worked=1916/365= 5.25

21 days' Basic pay = 328.76*21= AED 6,904.1

30 days essential salary=328.76*30= AED 9,863.01

Compensation every day = AED 10,000*12/365= 328.76

Absolute gratuity=21*328.76*5=34,520.55+(1,916/365-5)*30*328.76=2,459.00=36,979.5

Tip computation UAE Labor law if there should be an occurrence of Termination:

1. inside of a year – No Gratuity

2. Over a year yet under 5 years: 21 days of Basic Salary for each year of administration.

3. Over 5 years: 21 days' essential compensation for up to 5 years in addition to remaining years*30 days' fundamental pay *per day wage.

Where a laborer under a distinct term contract deserts his job at his own particular activity before the expiry of his agreement period, he might not be qualified for severance pay unless his nonstop time of administration surpasses five years.

Disclaimer: The above Gratuity figuring UAE Labor law is to be utilized as a direction and is not be taken as conclusive estimation. The UAE Labor Law is powerful and is liable to change. If you don't mind fare thee well while contacting so as to figure the Ministry of Labor.

We are no chance in charge of your activities. This computation is planned for individual utilize and solace.

Usefull Links

U.A.E. LABOUR LAW - FEDERAL LAW NO. (8) OF 1980 UAE Labour Law Section 16 - Payment of Gratuity Can UAE firm pay just seven days per year end of service gratuity? Gratuity calculation UAE labour law-Unlimited contract UAE Labour Law 2011

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