“UAE Labor Law Gratuity Calculation – Your Expert Guide to Employee Benefits”

Introduction

Gratuity Calculation in UAE Labor Law is a critical aspect that every employee working in the United Arab Emirates should understand. It is a form of end-of-service benefit that an employer provides to an employee who has completed a year or more in continuous service. The calculation is based on the employee’s basic salary and the duration of their service. This guide provides expert guidance on how this calculation is made, the factors influencing it, and the rights of employees under the UAE Labor Law. It is designed to help employees navigate and understand their entitlements better, ensuring they are adequately compensated upon the termination of their employment.

Understanding Gratuity Calculation under UAE Labor Law: A Comprehensive Guide

Understanding the gratuity calculation under the United Arab Emirates (UAE) Labor Law is crucial for every employee working in the region. This end-of-service benefit is a significant part of the employment contract and can be a substantial sum, especially for long-term employees. Therefore, having a comprehensive understanding of how it is calculated can help employees plan their financial future more effectively.

The UAE Labor Law provides a clear framework for calculating gratuity. The calculation is based on the employee’s basic salary, which excludes housing allowance, travel allowance, overtime pay, and other bonuses. The basic salary is the amount stipulated in the employment contract and is used as the basis for calculating the gratuity.

The length of service is another critical factor in the gratuity calculation. For employees who have completed one year of service but less than five years, the gratuity is calculated at 21 days of basic salary for each year of service. For those who have served for more than five years, the gratuity is calculated at 30 days of basic salary for each additional year, provided the total gratuity does not exceed two years’ salary.

However, there are certain exceptions to this rule. If an employee resigns before completing five years of service, the gratuity is calculated differently. For those who resign within the first one to three years, they are entitled to one-third of the 21-day gratuity. If the period of service is more than three years but less than five years, the employee is entitled to two-thirds of the 21-day gratuity. If the employee resigns after five years of service, they are entitled to the full gratuity.

It’s also important to note that the UAE Labor Law differentiates between unlimited and limited contract employees when calculating gratuity. For unlimited contract employees who resign, the gratuity is calculated based on the length of service as mentioned above. However, for limited contract employees, the gratuity is calculated at 30 days’ basic salary for each year of service, regardless of whether the employee resigns or is terminated.

In the event of an employee’s death, the UAE Labor Law stipulates that the gratuity should be paid to the heirs of the deceased. The calculation is the same as if the employee had resigned or been terminated.

The gratuity calculation under the UAE Labor Law can seem complex, but understanding it is essential for every employee. It’s a significant part of the employment benefits and can greatly contribute to an employee’s financial security upon leaving a job. Therefore, it’s advisable for employees to familiarize themselves with the law and seek expert guidance if necessary.

In conclusion, the UAE Labor Law provides a clear and comprehensive framework for calculating gratuity. It takes into account the basic salary, length of service, type of contract, and circumstances of termination or resignation. By understanding these factors and how they contribute to the gratuity calculation, employees can better plan their financial future and ensure they receive the benefits they are entitled to under the law.

Expert Tips on Maximizing Your Gratuity Benefits in UAE Labor Law

Gratuity calculation in the United Arab Emirates (UAE) labor law is a critical aspect that every employee should understand. This end-of-service benefit is a significant part of the UAE Labor Law and is designed to provide financial security to employees after their employment tenure. However, the calculation of this benefit can be complex, and it is essential to have expert guidance to maximize your gratuity benefits.

The first step in maximizing your gratuity benefits is understanding how it is calculated. The UAE Labor Law stipulates that the gratuity is calculated based on the employee’s basic salary, which excludes allowances such as housing, transport, and other benefits. The calculation also depends on the length of service and the type of contract, whether it’s limited or unlimited. For instance, under an unlimited contract, if an employee has served for more than one year but less than five years, they are entitled to 21 days’ basic salary for each year of service. If the service period exceeds five years, the employee is entitled to 30 days’ basic salary for each additional year.

Another crucial factor to consider is the termination of employment. If an employee resigns before completing a year of service, they are not entitled to any gratuity. However, if the employee resigns after completing more than a year but less than three years of service, they are entitled to one-third of the 21 days’ basic salary for each year of service. If the service period is between three to five years, the employee is entitled to two-thirds of the 21 days’ basic salary for each year of service. If the service period exceeds five years, the employee is entitled to the full 21 days’ basic salary for each year of service.

To maximize your gratuity benefits, it is advisable to negotiate a higher basic salary when accepting a job offer or during salary reviews. Since the gratuity is calculated based on the basic salary, a higher basic salary will result in a higher gratuity payout. It is also essential to understand the terms of your contract and the implications of resigning or terminating your employment.

Moreover, it is crucial to keep a record of all your employment documents, including your contract, payslips, and any other relevant documents. These documents will serve as proof of your employment and the terms of your contract, which will be necessary when calculating your gratuity.

In addition, it is recommended to seek legal advice if you are unsure about your gratuity calculation or if you believe that your employer is not adhering to the UAE Labor Law. Legal experts can provide guidance and ensure that you receive the gratuity you are entitled to.

In conclusion, understanding the UAE Labor Law and the calculation of gratuity is essential for every employee. By negotiating a higher basic salary, understanding your contract, keeping a record of your employment documents, and seeking legal advice when necessary, you can maximize your gratuity benefits. Remember, the gratuity is a significant part of your employment benefits, and it is your right to receive it.

Understanding the intricacies of gratuity calculation under the UAE Labor Law is crucial for every employee working in the United Arab Emirates. This not only ensures that they are aware of their rights but also helps them plan their financial future effectively. The UAE Labor Law provides a comprehensive framework for employee benefits, including the end-of-service gratuity, which is a significant part of an employee’s compensation package.

The end-of-service gratuity is a lump sum payment made to an employee upon termination of their employment contract. It is calculated based on the employee’s basic salary and the duration of their service. The basic salary, in this context, excludes any allowances such as housing, travel, or utilities. The gratuity is calculated differently for employees who are on a limited (fixed-term) contract and those on an unlimited (open-ended) contract.

For employees on a limited contract, the gratuity is calculated as 21 days’ basic salary for each year of the first five years of service, and 30 days’ basic salary for each additional year, provided the total gratuity does not exceed two years’ salary. For employees on an unlimited contract, the gratuity is calculated as half of the 21 days’ basic salary for each of the first five years of service, and 30 days’ basic salary for each additional year, again provided the total gratuity does not exceed two years’ salary.

However, it’s important to note that if an employee resigns before completing five years of service, the gratuity calculation changes. For those on a limited contract, no gratuity is payable if the employee resigns within the first five years. For those on an unlimited contract, the gratuity is calculated as 7 days’ basic salary for each of the first three years of service, and thereafter at half of the 21 days’ basic salary for each of the next two years.

The UAE Labor Law also stipulates certain conditions under which an employee may be disqualified from receiving the end-of-service gratuity. These include termination due to misconduct or if the employee resigns without serving notice.

In addition, the law provides for the deduction of any amounts owed by the employee to the employer from the gratuity. This could include loans, advances, or damages caused by the employee.

While the UAE Labor Law provides a clear framework for gratuity calculation, it can still be a complex process. It is advisable for employees to seek expert guidance to ensure they fully understand their rights and entitlements. Legal advisors or HR professionals can provide valuable insights into the nuances of the law and help employees navigate the gratuity calculation process.

In conclusion, understanding the gratuity calculation under the UAE Labor Law is essential for every employee. It not only ensures that they are aware of their rights but also helps them plan their financial future effectively. By seeking expert guidance, employees can ensure they are fully informed and can make the most of their end-of-service benefits.

How to Calculate Your Gratuity: A Step-by-Step Guide According to UAE Labor Law

Gratuity calculation in the United Arab Emirates (UAE) labor law is a critical aspect that every employee should understand. This end-of-service benefit is a significant part of the UAE Labor Law and is designed to provide financial security to employees after their employment tenure. However, the calculation of this benefit can be complex and often requires expert guidance. This article aims to provide a step-by-step guide to help employees understand how to calculate their gratuity according to UAE Labor Law.

The first step in calculating your gratuity is to understand the type of contract you have. In the UAE, there are two types of contracts: limited and unlimited. The type of contract you have significantly impacts the calculation of your gratuity. For a limited contract, the gratuity is calculated as 21 days’ salary for each year of the first five years of service and 30 days’ salary for each additional year, provided the total of the gratuity does not exceed two years’ salary. For an unlimited contract, the gratuity is calculated as 21 days’ salary for each year of the first five years of service and 30 days’ salary for each additional year, provided the total of the gratuity does not exceed two years’ salary.

The second step is to determine your basic salary. The basic salary is the amount stated in your contract and does not include allowances such as housing, transport, or other benefits. This is the amount used to calculate your gratuity.

The third step is to calculate the gratuity based on your years of service and the type of contract. For example, if you have a limited contract and have worked for five years, your gratuity would be calculated as 21 days of your basic salary multiplied by five. If you have worked for more than five years, the calculation would be 21 days of your basic salary multiplied by five, plus 30 days of your basic salary multiplied by the number of years above five.

The fourth step is to consider any deductions. According to UAE Labor Law, an employer can deduct from the employee’s gratuity any amounts owed to the employer, such as loans or advances.

The final step is to ensure that you receive your gratuity payment. According to UAE Labor Law, the gratuity should be paid within 14 days after the end of the contract. If the employer fails to pay within this period, they may be liable for penalties.

In conclusion, understanding the calculation of your gratuity according to UAE Labor Law is crucial for every employee. It ensures that you receive the correct end-of-service benefit and provides financial security after your employment tenure. However, the calculation can be complex and often requires expert guidance. Therefore, it is advisable to seek professional advice if you are unsure about any aspect of the calculation. Remember, knowledge is power, and understanding your rights as an employee is the first step towards ensuring that you are treated fairly and legally in the workplace.

The Impact of UAE Labor Law on Your Gratuity Calculation: What Every Employee Should Know

The United Arab Emirates (UAE) Labor Law is a comprehensive legal framework that governs the relationship between employers and employees. One of the key aspects of this law is the provision for end-of-service benefits, commonly known as gratuity. This article aims to provide expert guidance on gratuity calculation under the UAE Labor Law, a topic of great importance to every employee working in the UAE.

The UAE Labor Law stipulates that an employee who has completed one year or more of continuous service is entitled to gratuity at the end of their employment. This is a significant provision as it ensures that employees receive a form of financial reward for their service, irrespective of whether they resign or are terminated. However, the calculation of this gratuity is subject to several factors, which every employee should be aware of.

Firstly, the type of contract an employee is under plays a crucial role in the gratuity calculation. There are two types of contracts under the UAE Labor Law: limited (or fixed-term) and unlimited (or open-ended). For those under a limited contract, the gratuity is calculated as 21 days’ salary for each year of the first five years of service, and 30 days’ salary for each additional year, provided the total gratuity does not exceed two years’ salary. For those under an unlimited contract, the calculation is the same, but if the employee resigns before completing five years of service, the gratuity is reduced to two-thirds for service of three to five years, and to one-third for service of one to three years.

Secondly, the basis of salary used for the gratuity calculation is another important factor. The UAE Labor Law specifies that the salary used for this calculation should be the final salary that the employee was earning prior to termination or resignation. However, it’s important to note that this refers to the basic salary, which includes the wage paid to the employee excluding any housing allowance, travel allowance, overtime pay, representation allowance, or any other bonuses.

Thirdly, the law also provides for certain deductions from the gratuity. Any amount of money that the employer has spent on behalf of the employee, such as recruitment expenses or payment for repatriation, can be deducted from the gratuity. Additionally, if the employment contract stipulates that the employer will provide end-of-service benefits in a scheme other than the statutory gratuity, and the amount in this scheme is greater than the statutory gratuity, the employee will not receive the statutory gratuity but will receive the amount in the scheme.

In conclusion, the UAE Labor Law provides a robust framework for the calculation of gratuity, ensuring that employees are adequately rewarded for their service. However, the calculation is subject to various factors, including the type of contract, the basis of salary, and any deductions. Therefore, it is crucial for every employee to understand these factors and how they impact their gratuity calculation. This understanding will not only enable employees to plan their finances better but also ensure that they are fully aware of their rights under the UAE Labor Law.

Demystifying Gratuity Calculation: Insights from UAE Labor Law Experts

Gratuity calculation in the United Arab Emirates (UAE) labor law is a topic that often leaves employees puzzled. This is primarily due to the complex nature of the law and the various factors that come into play when calculating the end-of-service gratuity. However, with expert guidance, it is possible to demystify this complex subject and gain a clear understanding of how gratuity is calculated under UAE Labor Law.

Firstly, it is important to understand that gratuity is a form of compensation provided to an employee by the employer at the end of the employment contract. It is a legal right of the employee, as stipulated by the UAE Labor Law, and is calculated based on the duration of service and the type of contract, among other factors.

The basic formula for gratuity calculation in the UAE is straightforward. For employees who have completed one year of service but less than five years, the gratuity is calculated as 21 days’ salary for each year of service. For those who have served for five years or more, the gratuity is calculated as 30 days’ salary for each year of service beyond the fifth year.

However, the actual calculation can be more complex due to several factors. For instance, the type of contract – limited or unlimited – can affect the gratuity calculation. In a limited contract, the employee is entitled to full gratuity regardless of the reason for termination, provided they have completed a year of service. In contrast, in an unlimited contract, the gratuity can be reduced or forfeited depending on the reason for termination.

Another factor that can influence the gratuity calculation is the nature of the salary. The UAE Labor Law stipulates that the gratuity should be calculated based on the basic salary, excluding allowances such as housing, transport, and others. This means that if an employee’s salary is composed of a basic salary and various allowances, only the basic salary will be considered for the gratuity calculation.

Moreover, the law also provides for deductions from the gratuity in certain circumstances. For example, if the employer has provided the employee with a retirement benefit or pension, the amount of such benefit or pension may be deducted from the gratuity. Similarly, if the employee owes any money to the employer, such as loans or advances, these can also be deducted from the gratuity.

In conclusion, while the basic principle of gratuity calculation in the UAE Labor Law is simple, the actual calculation can be complex due to various factors. Therefore, it is advisable for employees to seek expert guidance to understand their rights and entitlements under the law. By doing so, they can ensure that they receive the gratuity they are entitled to, and avoid any potential disputes or misunderstandings with their employer.

A Closer Look at Gratuity Calculation in the UAE Labor Law: An Employee’s Perspective

The United Arab Emirates (UAE) Labor Law is a comprehensive legal framework that governs the relationship between employers and employees. One of the key aspects of this law is the provision for end-of-service benefits, commonly known as gratuity. This article aims to provide expert guidance on gratuity calculation in the UAE Labor Law from an employee’s perspective.

Gratuity is a monetary benefit that an employee is entitled to receive from their employer upon termination of their employment contract, provided they have completed at least one year of service. The purpose of this benefit is to provide financial support to the employee after their employment ends. The calculation of this benefit is based on the employee’s basic salary, excluding allowances such as housing, transport, or other benefits in kind.

The UAE Labor Law stipulates different methods of gratuity calculation for different types of contracts. For employees on unlimited contracts, the gratuity is calculated as 21 days’ basic salary for each year of the first five years of service, and 30 days’ basic salary for each additional year, provided the total gratuity does not exceed two years’ salary. For employees on limited contracts, the gratuity is calculated as 30 days’ basic salary for each year of service, with no maximum limit.

However, it’s important to note that the gratuity is reduced if the employee resigns before completing five years of service. For unlimited contracts, if the employee resigns within the first three years, they receive no gratuity. If they resign after completing three but less than five years of service, they receive one-third of the 21 days’ gratuity for each year of service. If they resign after completing five years of service, they receive two-thirds of the 21 days’ gratuity for each year of service. For limited contracts, if the employee resigns before completing five years of service, they receive half of the 30 days’ gratuity for each year of service.

In addition to these rules, the UAE Labor Law also provides for certain deductions from the gratuity. If the employer has provided the employee with housing, or has paid their housing rent, they can deduct the equivalent of 15 days’ salary from the gratuity for each year of service. Similarly, if the employer has paid the employee’s repatriation expenses, they can deduct the equivalent of one month’s salary from the gratuity.

In conclusion, the calculation of gratuity in the UAE Labor Law is a complex process that takes into account various factors such as the type of contract, the length of service, and any deductions for housing or repatriation expenses. It’s crucial for employees to understand these rules in order to ensure that they receive the full benefits they are entitled to. It’s also advisable for employees to seek expert advice if they have any doubts or queries about their gratuity calculation. After all, knowledge is power, and being well-informed about your rights and entitlements under the UAE Labor Law can go a long way in ensuring a secure and comfortable future.

The Essentials of Gratuity Calculation: Understanding Your Rights under UAE Labor Law

Gratuity calculation in the United Arab Emirates (UAE) labor law is a critical aspect that every employee should understand. This end-of-service benefit is a significant part of the UAE Labor Law, and it is designed to provide financial security to employees after their employment period. Understanding the essentials of gratuity calculation can help employees to plan their future effectively and ensure that they are not short-changed when their employment ends.

The UAE Labor Law stipulates that any employee who has completed a year or more in continuous service is entitled to an end-of-service gratuity upon the termination of their employment. The calculation of this gratuity is based on the employee’s last drawn salary and the duration of their service. It is important to note that the last drawn salary refers to the basic salary, excluding allowances such as housing, travel, or overtime pay.

The gratuity for employees who are on a fixed contract is calculated differently from those on an unlimited contract. For those on a fixed contract, the gratuity is equivalent to 21 days’ basic salary for each year of the first five years of service. For service beyond five years, the gratuity is calculated as 30 days’ basic salary for each additional year. However, the total gratuity should not exceed two years’ salary.

For employees on an unlimited contract, the gratuity is calculated as 21 days’ basic salary for each year of the first five years of service. However, if the employee has served more than five years, the gratuity for the years after the first five is calculated as 30 days’ basic salary for each additional year, provided the total gratuity does not exceed two years’ salary.

In cases where the employment is terminated by the employer for reasons other than misconduct, the employee is entitled to full gratuity. However, if the employee resigns before completing five years of service, they are entitled to a reduced gratuity. If the employee resigns after completing five years of service, they are entitled to full gratuity.

It is also important to note that the UAE Labor Law provides for the deduction of any amounts owed by the employee to the employer from the gratuity. Furthermore, in the event of the employee’s death, the gratuity is paid to the heirs as per the provisions of the UAE Labor Law.

Understanding the essentials of gratuity calculation under the UAE Labor Law is crucial for employees to ensure that they receive their rightful end-of-service benefits. It is advisable for employees to seek expert guidance to understand the intricacies of the law and to ensure that they are not short-changed. The UAE Labor Law is designed to protect the rights of employees and to provide them with financial security upon the termination of their employment. Therefore, it is essential for employees to understand their rights and to ensure that they receive their rightful benefits.

In conclusion, the gratuity calculation in the UAE Labor Law is a critical aspect that every employee should understand. It is designed to provide financial security to employees after their employment period. Understanding the essentials of gratuity calculation can help employees to plan their future effectively and ensure that they are not short-changed when their employment ends. Therefore, it is advisable for employees to seek expert guidance to understand the intricacies of the law and to ensure that they receive their rightful benefits.

Gratuity Calculation in UAE Labor Law: A Practical Guide for Employees

Gratuity calculation in the United Arab Emirates (UAE) labor law is a critical aspect that every employee should understand. This end-of-service benefit is a significant part of the UAE Labor Law, and it is designed to provide financial security to employees after their employment tenure. The gratuity calculation is based on the employee’s basic salary and the duration of service. However, the calculation can be complex, and it is essential to have expert guidance to understand it fully.

The UAE Labor Law stipulates that an employee is entitled to an end-of-service gratuity if they have completed at least one year of continuous service. The gratuity is calculated on the basis of the employee’s last drawn basic salary, excluding any allowances such as housing, transport, or other benefits. The basic salary is the amount specified in the labor contract and does not include any bonuses or commissions.

The gratuity calculation differs for employees under different types of contracts. For those under unlimited contracts, the gratuity is calculated as 21 days’ salary for each year of the first five years of service, and 30 days’ salary for each additional year, provided the total gratuity does not exceed two years’ salary. For employees under limited contracts, the gratuity is calculated as 30 days’ salary for each year of service, with no maximum limit.

However, there are certain conditions under which the gratuity can be forfeited. If an employee under an unlimited contract resigns before completing five years of service, they are entitled to a reduced gratuity. If they resign after completing five years, they are entitled to full gratuity. On the other hand, if an employee under a limited contract resigns before completing their contract, they forfeit their gratuity.

It is also important to note that the gratuity is calculated on the basis of the last drawn basic salary at the time of termination or resignation. Any salary increments during the service period are not considered in the calculation. Furthermore, if an employee has any unpaid leaves, the days are deducted from the service period for the gratuity calculation.

In case of termination, the employer is obligated to pay the gratuity within 14 days from the date of termination. If the employer fails to do so, they are liable to pay the employee a penalty equivalent to 15 days’ salary for each delayed month.

Understanding the gratuity calculation in the UAE Labor Law is crucial for employees to ensure they receive their rightful end-of-service benefits. It is advisable to seek expert guidance to navigate through the complexities of the law and to avoid any potential pitfalls. The UAE Labor Law is designed to protect the rights of employees, and a thorough understanding of the law can help employees safeguard their financial interests.

In conclusion, the gratuity calculation in the UAE Labor Law is a significant aspect of an employee’s financial security after their employment tenure. It is based on the employee’s basic salary and the duration of service, with different calculations for employees under unlimited and limited contracts. However, certain conditions can lead to a forfeiture or reduction of the gratuity. Therefore, it is essential for employees to understand the law and seek expert guidance to ensure they receive their rightful benefits.

Mastering Gratuity Calculation: A Detailed Study of UAE Labor Law

Gratuity calculation in the United Arab Emirates (UAE) labor law is a critical aspect that every employee should understand. This end-of-service benefit is a significant part of the UAE Labor Law, and it is essential for employees to comprehend how it is calculated to ensure they receive what they are rightfully owed when their employment ends.

The UAE Labor Law stipulates that any employee who has completed a year or more in continuous service is entitled to an end-of-service gratuity upon the termination of their employment. The days of absence from work without pay are not included in the calculation of the period of service. The gratuity is calculated on an annual basis if the employee has actually completed one year or more. The law mandates that the gratuity should be calculated on the basis of the last wage drawn by the employee, which serves as the reference point for the calculation.

The calculation of the gratuity varies depending on the type of contract, whether it is a limited or unlimited contract, and the duration of service. For employees on a limited contract, the gratuity is equivalent to 21 days’ salary for each year for the first five years and 30 days’ salary for each additional year, provided the total gratuity does not exceed two years’ salary. For those on an unlimited contract, the gratuity is 21 days’ salary for each of the first five years and 30 days’ salary for each additional year, provided the total gratuity does not exceed two years’ salary. However, if the employee resigns before completing five years of service, the gratuity is calculated differently.

In the case of resignation under an unlimited contract, if the duration of service is between one to three years, the employee is entitled to one-third of the 21-days gratuity pay. If the duration of service is between three to five years, the employee is entitled to two-thirds of the 21-days gratuity pay. If the duration of service exceeds five years, the employee is entitled to full 21-days gratuity pay.

It is also important to note that the UAE Labor Law has provisions for deductions from the gratuity. The employer may deduct any amounts owed to them by the employee from the employee’s gratuity. Furthermore, the law states that an employee is not entitled to a gratuity if they are dismissed for any of the reasons specified in Article 120 of the UAE Labor Law, such as adopting a false identity, committing an error resulting in substantial material loss for the employer, or if they are found intoxicated or under the influence of drugs at work.

In conclusion, understanding the gratuity calculation in the UAE Labor Law is crucial for every employee. It not only ensures that they are aware of their rights and benefits but also enables them to plan their financial future effectively. It is advisable for employees to seek expert guidance to understand the intricacies of the law and ensure they receive their rightful end-of-service benefits. The UAE Labor Law has been designed to protect the rights of employees, and a thorough understanding of its provisions can go a long way in ensuring a smooth and amicable end to the employment relationship.

Q&A

1. Q: What is gratuity in UAE Labor Law?
A: Gratuity in UAE Labor Law is a sum of money paid by an employer to an employee for the services rendered during the period of employment. It is calculated based on the employee’s basic salary and years of service.

2. Q: How is gratuity calculated in UAE?
A: Gratuity is calculated based on the employee’s basic salary at the time of termination or end of contract. For less than 1 year of service, no gratuity is given. For 1-5 years of service, the employee gets 21 days’ basic salary for each year. For service above 5 years, the employee gets 30 days’ basic salary for each additional year.

3. Q: Are there any exceptions to the gratuity calculation?
A: Yes, if an employee is terminated due to misconduct, they may not be entitled to gratuity. Also, if an employee resigns before completing 1 year of service, they are not eligible for gratuity.

4. Q: Is gratuity applicable to all types of contracts?
A: Gratuity is applicable to both limited (fixed-term) and unlimited (open-ended) contracts, but the calculation may vary.

5. Q: How is gratuity calculated for a limited contract?
A: For a limited contract, if the employee has served for more than 1 year but less than 5 years, they are entitled to 21 days’ basic salary for each year of service. If the service period is more than 5 years, they get 30 days’ basic salary for each additional year.

6. Q: How is gratuity calculated for an unlimited contract?
A: For an unlimited contract, if the employee resigns before completing 5 years, they get 7 days’ basic salary for each year for the first 1-3 years, and 21 days’ salary for the remaining years. If the service period is more than 5 years, they get 30 days’ basic salary for each additional year.

7. Q: Are there any deductions from the gratuity amount?
A: Yes, any outstanding loans or dues to the company can be deducted from the gratuity amount.

8. Q: Is overtime included in the gratuity calculation?
A: No, overtime is not included in the gratuity calculation. It is based on the basic salary only.

9. Q: What happens to the gratuity if an employee dies?
A: If an employee dies, the gratuity is paid to the employee’s legal heirs.

10. Q: Can an employer refuse to pay gratuity?
A: No, as per UAE Labor Law, an employer cannot refuse to pay gratuity if the employee has completed 1 year of continuous service.

Conclusion

In conclusion, the UAE Labor Law provides clear guidelines for the calculation of gratuity for employees. This end-of-service benefit is calculated based on the employee’s basic salary and years of service. The law stipulates that employees who have completed one year of service are entitled to gratuity, with the amount increasing with each year of service. However, the gratuity can be forfeited under certain conditions such as dismissal due to misconduct. Therefore, it is crucial for employees in the UAE to understand these regulations to ensure they receive their rightful benefits.