How to Calculate Gratuity in Abu Dhabi (End of Service Benefit)

13th October 2018

Calculating gratuity in Abu Dhabi and Dubai often causes confusion. How do you calculate gratuity? How much gratuity is the employee entitled to?

What is Gratuity in Abu Dhabi and Dubai?

Gratuity is also known as End of Service Benefit or EOSB. Most expats working in Abu Dhabi and Dubai aren't provided with a pension contribution from their employer. However the UAE's Federal Labour Law allows for each worker to be entitled to a gratuity payment at the end of their service providing they meet the criteria.

What is the Criteria for Gratuity in Abu Dhabi and Dubai?

Employees must have completed a minimum of one year's service. Absent days without pay should not be included in the calculation of the period of service.

How to Calculate Gratuity in Abu Dhabi and Dubai

Gratuity shall be calculated as follows:
The wage of 21 days for each of the first five (5) years of service.
The wage of 30 days for every additional year, up to a maximum equivalent to two (2) years salary.
Gratuity is payable on parts of the year providing a minimum of one year's service has been completed.
Gratuity should be calculated on the last paid wage.
Gratuity should be calculated on the basic wage and not include allowances such as transport and travel or education.

Can deductions be made against the Gratuity entitlement?

Deductions can be made in such instances the employee owes money to the employer.

When an employee on an Limited Contract resigns, they will be entitled to just 1/3 of the gratuity, providing they have given continuous service of between one (1) and three (3) years.

When an employee on an Unlimited Contract resigns, they will be entitled to just 2/3 of the gratuity in the instance they have given continuous service of between three (3) and five (5) years.

Are there instances when an employee is not entitled to Gratuity?

An employee is not entitled to gratuity when they haven't completed one (1) year's service.
In the instance an employer dismisses an employee without notice, as per the 10 instances outlined in Article 120 of the Labour Law.
When an employee on a Limited Contract resigns, they will not be entitled to gratuity unless their duration of service exceeds five (5) years.

What are the Gratuity rules in the event of the death of an employee?

In the event of the death of the employee, the gratuity should be paid to the beneficiaries.

How can Gateway Group help you when employing staff in Abu Dhabi and Dubai?

Gateway Group can help with your Abu Dhabi and Dubai visa processing and visa cancellation requirements. Our experienced and knowledgeable team can confirm the document requirements and fees and subsequently manage the process to be streamlined and efficient. To arrange for Gateway to organise you employee's visas, email us: Info@GatewayToUAE.com

Written by Jenny Hunt, Founding Partner & CEO

Gateway Group of Companies, Abu Dhabi & Dubai UAE

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