What is gratuity in UAE?
Gratuity is basically the sum of money that is paid to an employee by an employer at the end of his/her job or employment. Gratuity calculation in UAE has the same basic formula like any other country. However, the percentage or conditions may differ. So, in this page, we will discuss all the rules of gratuity calculation in UAE by answering all these questions that are in your mind. Follow our website to get more information about the laws in UAE and get the benefit of knowledge without any trouble.
How UAE gratuity is calculated?
You should know that the formula of gratuity calculation in UAE is very simple. A person is paid gratuity on the basis of his/her latest salary. Here you should also keep in mind that this salary does not include any allowances or any extra pay. It is the basic salary on which you gratuity is calculated. If you have to pay any amount of money to employer, the employer can charge that money from you gratuity at the time of calculation.
Who qualifies for gratuity?
A person can qualify for gratuity in UAE if he/she completes their one year of continuous job without breaking any law. After one year of service, if a person resigns or the company ends the contract with him/her, the company/ employer will pay the gratuity to the employee. At the time of calculating gratuity, the type of your contract with the company is kept in notice. There is slightly different formula for gratuity calculation in UAE for a person with limited contract and a person with unlimited contract. If a person resigns before completing one year, he/she will not get the gratuity benefit from the employer.
A limited contract in UAE is basically an agreement between an employee and employer. In this agreement, there is a fixed time for the service. Before the completion of this time period, a person cannot leave without the consent of his employer. In case, the person leave his job without the will of his employer, he/she might get certain punishments as per the UAE law. This rule is applicable for those under a limited contract in UAE.
An unlimited contract is the the type of service in which there is no fixed time of service between the company and employee. So, a person can leave his job at any point of his job. But as per the rules, he/she has to give a notice period before resignation. This is the rule of unlimited contract in UAE.
How can you check your contract type online?
First of all, open the MOL Website.
Open the page eNetwasal. Go down the page to the category “Are you an Employer”.
Go to the icon, CONTRACT INFORMATION. Click on it.
On the next page, the website will ask you whether or not you have the labour card.
Select the option from Yes or No. Click on the Next.
Enter your passport number and other required details.
After this, you will get all information about your contract type including other terms and conditions of your contract in UAE.
What is MOL in UAE?
MOL stands for Ministry of Labour in United Arab Emirates. It has the authority to given all the matters of workers and employers. This ministry issues the work permits and other work related certificates in UAE.
The Formula of Gratuity Calculation in UAE for Limited Contract:
If a person has worked for more than one (1) year but less than five (5) years, he will get the gratuity on the basis of 21 working days for each year of work.
If a person has worked with a company for more than five (5) years, he/she will get the gratuity of full 30 days for each year of their service.
The Formula of Gratuity Calculation in UAE for Unlimited Contract:
In UAE, if a person resigns from his job, the gratuity calculation formula is slightly different than the termination by company. As you know, a person cannot get gratuity in UAE before completing one year os service. However, these are the rules of calculating gratuity for unlimited contract:
- If a person completes a duration of 1-3 years, he/she will get one third of 21 days salary at the time of gratuity calculation.
- In case, the time period of service is 3-5 years, the employee will get two third of 21 days salary for each year of work as gratuity.
*If the time period of his service spans over 5 years, then the gratuity will be 21 days of basic salary for each year. Keep in mind that this rule of calculation is for the person who resigns from his job under an unlimited contract.
In unlimited contract, if the company terminates the job contract with an employee, the rule of gratuity calculation will be:
*For one year to five years of work, 21 days salary for each year as gratuity.
*For more than five years of service, the gratuity will be counted as 30 days of basic salary from each year.
ONE THING YOU ALL SHOULD KNOW THAT A COMPANY OR EMPLOYER WOULD NOT PAY GRATUITY MORE THAN TWO YEARS PAY OF AN EMPLOYEE.
Is notice period considered for gratuity in UAE?
Yes, the gratuity is calculated in UAE till the last day of notice period. You do not need to worry about that, your notice period will be also calculated as duration of your service.
How much gratuity I will get?
Gratuity is given to you on the basis of many things in UAE. For example, first of all the type of your contract. Then, the duration of your service. Also, the rule of gratuity calculation in UAE differs if a person resigns or the company terminates his/her job.
Can gratuity be paid before 5 years?
Yes, a person can get gratuity pay in UAE before completion of five years service. However, there are different categories for certain time periods, on the basis of which you can get gratuity. We have discussed them above on this page. So, the 5 years service is not mandatory to get your gratuity pay.
What is the rule for gratuity?
The rule of gratuity is simple in UAE. If you complete one year of work at any place/company, you will get the gratuity. However, the absent days will not be counted at the time of gratuity calculation.
Is probation period considered for gratuity?
Probation period is a part of your service. So, it will be definitely considered for gratuity. The time period of your probation will be also counted if you have completed more than one year in service.
Can A Person Withdraw Gratuity After 5 Years?
A person cannot withdraw gratuity while he/she is serving. They can withdraw when they leave a company. While at the time of gratuity calculation in UAE, you have to keep in mind certain facts as the reason of your job termination. Either it is termination from company or you have resigned. Also, the time period for which you served a company.
Is it compulsory to pay gratuity?
Yes, companies or employers will pay gratuity to the employees and workers at the end of their job according to the UAE law. There are certain cases in which a person might not be able to get gratuity pay i.e, the short period of service etc.
How many years of service is required for gratuity?
At least, one year of service is necessary to acclaim gratuity in UAE. This is the most important factor at the time of gratuity calculation in UAE. Gratuity cannot be stopped if you have completed the required time period and have not broken any law.
Can a person resign after one year in UAE?
If the person is working under the unlimited contract, he/she can resign after one year or any time they want with a notice period. One can also acclaim gratuity if he or she has served a company for more than one year in UAE. For more info visit official website.
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