UAE Gratuity Calculator 2025 | End Of Service Calculations with MOHRE

Gratuity calculator is a digital tool designed to help employees of the UAE. In order to calculate the estimated gratuity, they are entitled to when leaving a job. It worked based on UAE labour law ‘Article 132’. Which outlines how gratuity is calculated based on basic salary and service duration.

This tool is especially helpful for expatriates & UAE nationals registered under the new end of service scheme. Through the Ministry of Human Resources and Emiratisation (MoHRE). Whether you are on a limited & unlimited contract. Gratuity calculator helps you plan your financial future more accurately.

How Does the UAE Gratuity Calculator Work?

The end of service calculator is simple yet efficient. You start by selecting your contract type (limited or unlimited). Then choose the reason your employment ended (resignation or termination). Next, you enter your basic basic salary & service dates. 

This can be calculated by using relevant formulas like the 21 day or 30 day salary per year for service rule. The tool follows the latest UAE Labour Law guidelines. Accounting for distinctions like partial gratuity for those resigning between 1 to 5 years & full gratuity beyond that.

UAE Gratuity Calculation Formula

Gratuity in the UAE is based on your last basic salary & total years of constant service. Employees earn 21 days basic pay per year for the first five years. Then 30 days pay for each year beyond that. Allowances like housing or transport are not included. partial gratuity applies in certain resignation cases under Articles 137 & 139.

Gratuity=(Basic salary * 21 * number of years served)

However, if they serve more than 5 years, their gratuity is:

Gratuity=[Basic salary * 21 * 5] + [Basic salary * 30 * (Years of service – 5)]

Key Steps for Calculating End-of-Service Benefits

Complete Minimum Service Period

To qualify for end of service gratuity in the UAE. You must complete at least one year of continuous employment. This eligibility criteria is outlined by UAE labour law. Absence without pay or any break in service may affect the entitlement. So marinating a consistent employment record is essential.

Know your Basic Salary

Gratuity is calculated based solely on your basic salary. Excluding any additional allowance like residence grant, transportation or overtime pay as stated in Article 134. Knowing your exact basic salary helps avoid common mistakes in gratuity estimation.

Enter the Contract Type

Your gratuity formula varies based on your employment contract whether it’s limited or unlimited. Under limited contract, the calculations are straightforward. While an unlimited contract involves partial entitlements for resignations before 5-years. 

Select the Way by Which You Left your Job

Whether you resigned, terminated or dismissed under Article 120 clearly states how your gratuity is calculated. Resignation within one to five years may reduce your entitlement. However termination without cause often qualifies you for full benefits. Be sure to understand the reason for separation to apply the right rules.

Add the Start and End Date of your Service

Accurately inputting your employment start & end dates ensure the accurate calculation of service years. Basically gratuity is only considered for a full service year not for half or partial one. Even small error in gratuity calculation can lead to incorrect results. especially when using automated gratuity calculators.

IMPORTANT FACTORS FOR CALCULATING GRATUITY:

1. Type of contract

Limited or unlimited contracts, directly affects how your gratuity is computed under the labour law of UAE. Each contract type follows different rules. Especially when it comes to resignations or terminations.

2. Last basic salary

Gratuity is calculated based only on your last drawn basic salary. Factor out the allowances like housing, transport & bonuses. Knowing this amount ensures a more accurate estimate of your end-of-service benefits.

3. Duration of employment

Your total years of service determine how many days salary you received 21 days per year for the first five years & 30 days thereafter. Partial entitlements may apply if you resign before completing five years

Who is eligible for gratuity in UAE?

• To be eligible for gratuity, an employee must have completed a minimum of one year of uninterrupted service with the employer.
  
• Periods of unpaid leave are excluded from the calculation of end-of-service benefits.

Gratuity Calculation Formula for Limited Contract

Under a limited contract, employees receive 21 days basic salary per year for the first five years. 30 days salary for each year after that. The total gratuity must not exceed the equivalent of two years wages ‘as per Article 138’ of UAE Labour Law.

Gratuity Calculation Formula for Unlimited Contracts

For an unlimited contract, the gratuity varies based on whether the employee resigned or was terminated. 

Resignation

If an employee resigns under an unlimited contract. Gratuity is granted partially ‘one-third for 1 to 3 years’ & two-thirds for 3 to 5 years, as outlined in Article 137. After 5 years of continuous service, the employee becomes eligible for full gratuity based on standard UAE Labour Law calculations.

Termination

In cases of termination under both limited and unlimited contracts. Employees are entitled to full gratuity if they’ve completed at least one year of service. except when dismissed for reasons under Article 120. The gratuity is calculated as 21-days basic salary per year for the first five years. Then 30 days for each additional year thereafter.

Can Gratuity be Denied?

Yes, gratuity can be denied. In case of dismissal for serious misconduct under article 120 of the UAE Labour Law. It may also be forfeited if the employee resigns before completing one year of continuous service. Other cases can fail to provide proper notice without a valid reason.

Secure Your Gratuity Benefits

Familiarize yourself with your Employment Contract

It’s important to understand whether your job falls under a limited or unlimited contract. As this directly impacts how your end-of-service benefits are calculated.

Know Your Legal Rights in the Emirates

Key labor laws such as Article 132, Article 137, and Article 139. By these articles you can Know when you’re eligible for gratuity and under what conditions it can be reduced or forfeited.

Keep Your Employment Record

Maintain detailed records of your service duration, basic salary & any contract renewals to ensure accurate gratuity calculation.

Discuss Concerns with Your Employer

Incase you’re unclear about your gratuity entitlement. You have to open communication with HR & your employer to clarify terms and avoid misunderstandings.

Seek Legal Assistance

For complex cases or disputes, consult a legal advisor familiar with UAE Labour Law. In order to protect your rights & secure your full gratuity payout.

Common Mistakes To Avoid While Using End Of Service Calculator Dubai

• Confusing Total Salary with Basic Salary
  
  Gratuity is calculated only on your basic salary, not your full package including other allowance .
  
• Ignoring Contract Type Differences
  
  Gratuity varies for limited & unlimited contracts. The gratuity calculator UAE adjusts the formula accordingly.
  
• Estimating Service Period Incorrectly
  
  Using approximate years instead of your exact start & end date can lead to inaccurate results in the gratuity calculator.
  
• Overlooking Resignation Clauses
  
  Partial gratuity or forfeiture may apply if you resign early, as per Articles 137 and 139.
  
• Not Updating Legal Changes
  
  Failing to consider recent changes in UAE Labour Law may affect how the Dubai gratuity calculator computes your benefits.
  

Tips to Increase Gratuity

• Complete Minimum Service Duration
  
  Ensure you serve at least five full years to benefit from the higher 30 days per year rate.
  
• Use an Accurate Gratuity Tool
  
  The gratuity calculator Dubai helps you estimate your entitlements precisely. In order to make sure you input correct details.
  
• Avoid Early Resignation
  
  Leaving before 5 years under an unlimited contract may reduce your gratuity to one-third & two-thirds.
  
• Negotiate a Higher Basic Salary
  
  Since gratuity is based on your last drawn basic wage; raise can increase your final gratuity payout.
  
• Stay Informed on Law Updates
  
  Keep track of updates in UAE Labour Law to use tools like the UAE gratuity calculator or gratuity calculator Dubai with confidence.
  

FAQ’s

Is using a gratuity calculator mandatory for employers?

No, using a gratuity calculator is not legally mandatory for employers, but it offers an efficient way to provide accurate estimates for end-of-service benefits. It serves as a helpful tool to simplify complex calculations based on the UAE Labour Law.

Does the calculator include bonuses/allowances in the basic salary?

No, the calculator exclusively uses your basic salary to compute gratuity, excluding bonuses, allowances, and other additional compensation. This ensures adherence to legal guidelines such as those outlined in Article 134.

Does termination reason impact gratuity for all contract types?

Yes, the reason for termination can significantly impact gratuity regardless of whether the contract is limited or unlimited. For instance, dismissal for misconduct under Article 120 may result in forfeiture of gratuity benefits.

Who is eligible for gratuity in UAE?

Any employee who has completed at least one year of continuous service in the UAE is eligible for gratuity, whether an expatriate or a UAE national registered under the new scheme. Eligibility is further defined by the specific terms of the employment contract and UAE Labour Law.

When does an Employee become Eligible for Gratuity in UAE?

An employee becomes eligible for gratuity after completing one full year of continuous service with the employer. This rule applies to both limited and unlimited contracts as outlined in the UAE Labour Law.

Is there any limit for Gratuity payable?

Yes, the total gratuity payable is typically capped at the equivalent of two years’ basic salary. This cap ensures that gratuity benefits remain within a reasonable limit, as stipulated by UAE legal guidelines.

What is the criterion for calculating gratuity accrued in UAE?

Gratuity is calculated based on the employee’s last drawn basic salary and the exact number of years of continuous service. The method applies 21 days’ salary per year for the first five years and 30 days’ salary for each additional year thereafter.

What are the Conditions in which an employer can deny gratuity payment to an employee?

An employer can deny gratuity if the employee resigns without proper notice or is terminated due to serious misconduct, fraud, or other violations outlined in Article 120. Additionally, employees who have not completed one year of continuous service are typically not entitled to gratuity.