UAE Gratuity Calculator
The UAE Gratuity Calculator by My Calculators simplifies this process, providing an accurate estimate of your end-of-service gratuity. The UAE gratuity system is a financial reward given to employees for their service when they leave a company. Whether you’re on a limited or unlimited contract, understanding how much gratuity you’re entitled to is crucial for financial planning.
In this guide, we’ll cover everything you need to know about gratuity in the UAE, including eligibility, formulas, and how to calculate your gratuity based on UAE labor laws by using UAE Gratuity Calculator by My Calculators.
Table of Contents
What is Gratuity in the UAE?
Gratuity is a lump-sum payment made by an employer to an employee at the end of their service. The amount depends on the basic salary, years of service, and the reason for leaving the company.
Under UAE Labour Law, gratuity applies to employees who have completed at least one year of continuous service in a company. The gratuity calculation varies based on whether the employee is on a limited or unlimited contract.
Eligibility for Gratuity in the UAE
Not all employees qualify for gratuity. Here’s who is eligible:
- Employees on a limited or unlimited contract
- Employees who have completed at least 1 year of continuous service
- Employees who resign or are terminated under certain conditions
Employees who are dismissed for misconduct are not entitled to gratuity.
How UAE Gratuity is Calculated
The gratuity formula is different for limited contracts and unlimited contracts.
1. Gratuity Calculation for Limited Contracts
A limited contract has a fixed end date. The gratuity calculation is as follows:
- Less than 1 year: No gratuity
- 1 to 5 years: 21 days’ basic salary per year of service
- More than 5 years: 30 days’ basic salary per year of service
Example Calculation:
If your basic salary is AED 10,000 and you worked 4 years, your gratuity will be:
If you worked 6 years, your gratuity will be:
2. Gratuity Calculation for Unlimited Contracts
An unlimited contract has no fixed end date, and gratuity depends on how and when the employee leaves the company.
- Resigned Before 1 Year: No gratuity
- Resigned After 1 to 3 Years: 1/3 of 21 days’ basic salary per year
- Resigned After 3 to 5 Years: 2/3 of 21 days’ basic salary per year
- Resigned After 5+ Years: Full 21 days’ salary per year
- Terminated by Employer: Full 21 days’ salary per year
Example Calculation:
If your basic salary is AED 10,000 and you resign after 4 years, your gratuity will be:
If you are terminated, you get the full amount:
To simplify your calculation process we are here with our UAE Gratuity Calculator by My Calculators
Gratuity Calculation Breakdown
| Years Worked | Limited Contract | Unlimited Contract (Resigned) | Unlimited Contract (Terminated) |
|---|---|---|---|
| Less than 1 year | No Gratuity | No Gratuity | No Gratuity |
| 1 to 3 years | 21 days per year | 1/3 of 21 days per year | 21 days per year |
| 3 to 5 years | 21 days per year | 2/3 of 21 days per year | 21 days per year |
| More than 5 years | 30 days per year | 21 days per year | 21 days per year |
Factors That Affect Gratuity Calculation
Several factors impact gratuity calculations, including:
- Basic Salary: Gratuity is based only on the basic salary, not allowances.
- Years of Service: Employees with less than 1 year of service are not entitled to gratuity.
- Contract Type: Gratuity differs for limited and unlimited contracts.
- Reason for Leaving: If an employee resigns early, they receive partial gratuity or none at all.
Common Questions About UAE Gratuity
1. Is gratuity based on total salary or basic salary?
Gratuity is calculated only on basic salary, not on allowances such as housing, transport, or bonuses.
2. What happens if I resign before completing 1 year?
Employees who resign before completing 1 year of service are not entitled to gratuity.
3. What if I work for more than 5 years?
For limited contracts, gratuity increases to 30 days’ basic salary per year after 5 years.
For unlimited contracts, gratuity remains 21 days’ basic salary per year.
4. Is gratuity taxable in the UAE?
No, gratuity payments in the UAE are not subject to income tax.
How to Calculate Gratuity Instantly?
Instead of manually calculating, use the UAE Gratuity Calculator by My Calculators to get an instant estimate. Simply enter:
- Basic salary
- Years of service
- Contract type
The calculator will instantly provide your estimated gratuity amount based on UAE labor laws.
Final Thoughts
Understanding UAE gratuity laws is essential for every employee. Whether you are resigning or being terminated, knowing your end-of-service entitlement helps you plan your financial future.
Use the UAE Gratuity Calculator by My Calculators to get an accurate calculation and avoid surprises. If you’re unsure about your gratuity, consult a legal expert or HR professional.
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