UAE Gratuity Calculation as per Labour Law

 Gratuity calculator uae 2020, uae gratuity 2020 as per uae labour law

Gratuity Calculator UAE 2020 is now available on our blog, employees working in LLC companies or free zone companies can easily calculate UAE gratuity 2020 as per UAE Labour Law on our blog by following below given UAE Gratuity Formula.

How to Calculate Gratuity in UAE:

To Calculate UAE Gratuity online with Formula Click Below Link

Gratuity Formula and Online Calculator Link

If you are planning to leave job or looking to change company in 2020, we got you covered with simple guide on How to Calculate Gratuity as per UAE Labour Law in 2020.

Gratuity Calculator Online for LLC companies:

The official website to calculate your gratuity for LLC company is given below, please read our full article before using calculator.

Gratuity Calculator Online for Free Zone Companies:

Gratuity Calculator for Free Zone companies online is also available, check out below link to visit official website to calculate your Gratuity online, before calculation please read full article on how to calculate gratuity in UAE as per Labour Law.

As per visitors’ queries, we came to know that some of UAE expats (workers) are unaware of latest gratuity rules in uae, so we have decided to write the latest UAE gratuity rules for 2020 in this article which will guide you throughout the process.

Gratuity Calculator UAE for Domestic Workers:

Ministry of Human Resources and Emiritization has announced that domestic workers are eligible for gratuity as per UAE Labour Law for 14 days salary per year, to read more about gratuity for housemaids in UAE, 

UAE Gratuity Calculator for Domestic Workers

Important point before calculating Gratuity:

The most important point before calculation is to know your contract type, if it is Limited or Unlimited? Because gratuity is depending up to your contract type and is based on the reason for end of service either it is Resignation or Termination?

Difference between Resignation and Termination in UAE?

Resignation means if employee (worker) quit or leave a job before completing contract while Termination means where company (employer) terminate an Employee (worker) or cancel his/her employment contract.

Gratuity will always be calculating by basic salary of worker and shall not include any benefits provided by company such as housing, transport etc.


Gratuity for Less than 1 Year of Service:

As per UAE LABOUR Law Article 132, Section 2, if worker Resigns with less than a year of service, he/she will not get any gratuity.

Please keep in mind that gratuity is only applicable when an employee completes 1 year of service with a company.

Gratuity for more than 1 & Less than 3 Years of Service:

If worker Resigns and he/she worked between 1-3 Years he/she should take 1/3rd of 21 days of basic salary for each year of employment.

Gratuity for more than 3 & Less than 5 Years of Service:

If worker Resigns and he/she worked for more than 3 years but less than 5 years, he/she should take 2/3rd of 21 days for each year he/she worked.

Gratuity for more than 5 Years of Service:

If worker is Resigning under Unlimited Contract after 5 years of continue service, the worker should take 21 days basic salary for every year he/she worked and the 30 days basic salary for additional years after completing 5 years.

What if Company Terminates the Employee?

In case of Unlimited contract where the company terminates the worker, 21 days of wages from minimum 1 and maximum 5 years should be paid to Employee, if employee worked for more than 5 years, he/she will be eligible for 30 Days of Basic wage for each year of his/her service.


Gratuity for Limited Contracts are little bit different from Unlimited Contracts.
1/3rd and 2/3rd system does not apply under limited contract.

Gratuity without Completing Limited Contract:

It is clearly mentioned in UAE LABOUR Law Article 138 that If employee have not completed his/her Limited Contract period as signed in Agreement, he/she will not be eligible for any Gratuity.

In simple words, if someone signed a limited period contract for 2 years but resigned after 6 months, 12 months or 14 months, company will do not pay any gratuity to that worker.

Gratuity for 1-5 Years of Service:

If you have completed your limited contract and it is within 1 to 5 years, you are entitled for 21 day’s basic salary wage for every single year of work.

Gratuity for 5+ Years of Service:

If you have completed 5 years of continuous service with your company and have resigned, then for the first 5 years of work you are eligible for 21 days’ basic wage & for the service above 5 years, you will get paid 30 day’s basic wage for every year of service.

What if Company Terminates the Employee under Limited Contract?

In case you have been terminated by your Company and you have not completed your 1 year yet, you will not eligible for any gratuity, but if you worked with the company for more than 1 year and less than 3 years, you will get 30 days of basic salary for No. of years your served before termination.

Frequently Asked Questions about UAE Gratuity Calculation 2020

Q: Can company deduct any payment from the gratuity payable to the worker?
Yes, the company (employer) may deduct any amount due and payable to the employee (worker) to the employer (company) from his/her gratuity payment and pay for the balance to the employee.

If there is any dispute between worker and company for gratuity payment or amount payable to the company, such case should be put to the Labour office (MOHRE/free zone) for investigation.

Q: Shall an employee be entitled to gratuity if he/she died?
Yes, in the event of a worker’s death, the employer (company) must pay the end-of-service gratuity to employee beneficiaries (heirs).

Q: What is the maximum Gratuity that we can get?
As per UAE LABOUR LAW, Article 132, maximum gratuity amount for employee cannot exceed 2 years’ gross salary.

Q: What is the worker entitled to at the termination of his/her contract?
The worker (employee) at the termination of his/her employment contract will be entitled for to the following:

1: A notice period, or any amount due in lieu of the notice period, only in case of unlimited contract.
2: Compensation (payment/reward) for the unreasonable dismissal if the contract was terminated by the company (employer) for unreasonable cause, only in-case of unlimited contract.
3: If employee is working under limited contract, compensation equivalent to the period until the end of the contract, or three month's salary whichever is greater.
4: Payments equivalent to the balance of unutilized leave or any part thereof.
5: Payments for overtime or any other pending balance or salary.
6: End of service benefits, gratuity.

Q: Can I get 3-month salary in case of termination?
Yes, if you are terminated for reason other than mentioned in UAE LABOUR LAW Article 120, you are eligible for 3 month’s compensations.

Q: What does gratuity mean in terms of compensation?
An employee who completes 1 year or more in continuous service shall be entitled to gratuity at the end of the his/her service.

The gratuity shall be calculated as follows:

1: 21 day's wages for each year of the first 5 years.
2: 30 day's wages for each additional year after 5 years on condition that the total of the gratuity shall not exceed the wages of 2 years.

Q: Will absence be calculated in Gratuity?
The day of absence from work without pay shall not be included in calculating the time period of service. However, if the employee (worker) completed 1 year in service he/she will be entitled to a gratuity for the fraction of the year proportional for the part of the year he spent in company if he has completed 1 year in continuous service.

Q: Explain End of Service Benefits (Gratuity) in simple words:
1: If the worker resigns of his or her own free will (resignation) before completing 1 year, then they will not be entitled to any gratuity pay.
2: Worker (employee) is entitled to a gratuity for the served fraction of a year, if he completes 1 year of continuous service.
3: The End of Service Gratuity will calculate based on last salary which the employee (worker) was entitled to, namely the basic salary. But it will not include allowances such as Accommodation, conveyance, utilities, furniture etc.
4: If the employee (worker) owes any money (loan, advance salary) to the company (employer), the company may deduct the amount from the employee's gratuity.

The guide about UAE Gratuity calculation 2020 as per UAE Labour Law ends here, feel free to ask your questions in below comment box regarding Unlimited Contract Gratuity or Limited Contract Gratuity.