Understanding how to calculate gratuity in the UAE is crucial for both employers and employees. As per the UAE Labour Law, gratuity—also known as end-of-service benefits—is a mandatory lump sum paid to employees who have completed at least one year of continuous service.
Gratuity is based on basic salary, not including housing or transportation allowances. The method of calculation depends on the type of contract (limited or unlimited) and the total years of service.
Here's a quick breakdown:
- Limited Contract:
- 1–5 years: 21 days’ salary per year
- 5+ years: 30 days’ salary per year
- Unlimited Contract (Resignation):
- 1–3 years: ⅓ of 21 days’ salary/year
- 3–5 years: ⅔ of 21 days’ salary/year
- 5+ years: Full 21 or 30 days’ salary/year
👉 Example:
If your basic salary is AED 10,000 and you've worked 6 years under a limited contract, your gratuity is:
135 days × AED 333.33/day = AED 44,999.55
Instead of doing manual math, use the MaxHR Gratuity Calculator—it’s fast, accurate, and fully aligned with UAE law. Plus, HR teams can use it to improve ROI and ensure compliance with zero guesswork.
Why It Matters
Whether you're planning your financial future or managing payroll, knowing how to calculate gratuity ensures transparency and legal compliance.
Comments
0 comment