Dubai Gratuity Calculator – How to Calculate Gratuity in UAE

Calculate your end of service benefits with our easy to use Dubai Gratuity Calculator. Learn the rules and formulas to understand practical gratuity calculation in the UAE. If you are leaving or resigning from your current job, or switching your career to a new company, this guide is a must read for you.

Pro Tip: Before leaving your job, make sure there is no travel ban in UAE against you. This quick check can help you avoid many complications.

Dubai Gratuity Calculator

How to Calculate Gratuity in Dubai, UAE? Online Gratuity Calculator 

As an employee working in Dubai or any of the seven states in the United Arab Emirates, you might be wondering what gratuity in the UAE is. Well, It's a token of appreciation to employees for their services in a company. After a specified period of time, an employee is entitled to receive a monetary benefit. 

It’s important for you to know that, according to article 51 of the UAE Labor Law, employees who have completed a full term of their employment in an organization are entitled to receive the end-of-service benefits or gratuity in the UAE.

Factors to Consider before Calculating Gratuity in the UAE

Following are the important factors to consider before calculating Gratuity in the UAE.

  • Contract Type: Determine whether the employment contract is limited or Unlimited. This is important because the calculation for both of the contracts is different.
  • Total Duration in the Company: Know the total tenure an employee has worked in an organization. To be eligible for gratuity, an employee should have served for more than 1 year.
  • Reason for Termination: Consider whether the employee has resigned by himself or he has been terminated by the employer.
  • Basic Salary: The last and crucial factor is that the last basic pay should be considered while calculating the gratuity. It does not include the conveyance, accommodation or food expenses.

Types of Employment Contract

There are two types of employment contracts in the UAE, they are:

  1. Limited Contract: Based on mutual interests, the employee works for a specific period of time in an organization. The end date is written in the contract and it expires automatically if not renewed.
  2. Unlimited Contract: This is the most common one in the UAE. It's more flexible and open-ended where there is no specific duration or end date written. Employees and employers both can terminate this by mutual consent or by giving a notice period of 1 or 3 months.
dubai gratuity calculator - types of contracts in uae

Gratuity Calculation Formula for Limited Contract

To calculate gratuity for limited contracts in the UAE, keep these points in mind:

  • Less than 1 year of Service: An employee is eligible for gratuity only after completing a minimum of one year of service. If resigned or terminated before completing this one-year period, no gratuity is given.
  • 1 to 5 years of Service: The employee is entitled to receive gratuity based on 21 days of basic salary per year for each year.
  • More than 5 years of Service: The employee will receive full gratuity based on a 30 days of a basic salary per year. However, the gratuity amount should not exceed the full salary for two years.

Steps to Calculate Gratuity for Limited Employment Contracts

Let’s take an example for better understanding. If your basic salary is 5000/- AED per Month:

  • Know how much is the daily wage by dividing your basic pay by 30. Let’s suppose 5000/30 = 166.66. Hence, Your daily wage is 166.66/- AED.
  • Now, Multiply your daily salary by 21 days. 166.66*21=3500/- AED. This amount represents your yearly gratuity from 1st to the 5th year of service. 
  • Those who have more than 5 years of service are entitled to receive the gratuity based on 30 days a year as long as the total amount of gratuity does not exceed the full salary for 2 years.

Gratuity Calculation Formula for Unlimited Contract

There are two scenarios for the calculation of unlimited contract, whether the employee has resigned himself, or he has been terminated by the employer.

If the Employee resign:  

  • Less than 1 year of Service: The Employee is not entitled to receive any gratuity if resigned before completing 1 year of service.
  • 1 to 3 years of Service: The employee shall receive 1/3 of the 21 days basic salary per year.
  • 3 to 5 years of Service: The employee will receive 2/3 of 21 days basic salary per year.
  • More than 5 years of Service: The employee will receive gratuity based on 21 days basic salary each year for the first 5 years and 30 days salary for additional years.

If the Employee Has Been Terminated:  

  • Less than 1 year of Service: If the employee is terminated with less than 1 year of service, he is not entitled to receive any gratuity. 
  • 1 to 5 years of Service: The employee is entitled to receive 21 days of basic salary for each year.
  • More than 5 Years of Service: The employee is entitled to receive 21 days of basic salary each year for the first 5 years and 30 days of basic salary for additional years.

Note: The duration where the employee was absent and did not receive salary for the said period should not be included in the gratuity. Hence, the calculator above is also based on the full working duration of the employees.

How Does Dubai Gratuity Calculator Work? 

Not only calculating your gratuity manually is quite difficult but time-consuming as well. The Dubai Gratuity Calculator on our website is designed for easy use.

With just a few inputs:

Your basic salary, employment contract type (limited or unlimited), start and end date of your employment and the method of job ending (resigned or termination).

You can quickly obtain your gratuity amount and employment duration on your screen.

It’s that simple.

Calculate Dubai's gratuity calculator showing calculation for gratuity

Pro Tip: Use our latest tool to calculate VAT in UAE.

FAQs

The end of service gratuity is a type of compensation given to an employee on its retirement as a token of appreciation.

The maximum gratuity in the UAE should not exceed two years of an employee’s full salary.

Yes, gratuity in the UAE is calculated on basic salary.

Four factors are crucial for calculating gratuity in the UAE: Contract type, total duration in the company, reason for termination, and basic salary.

Yes, expats are eligible for end of service benefits if all the requirements are fulfilled.

Yes, if your employer owes you some money, he can be compensated from your gratuity’s amount.

If the salary was not given in the absence of work, then gratuity will not be given for that period.

By using our simple and user-friendly Dubai Gratuity Calculator, you can accurately find out how much end-of-service benefits you will receive from your employer once you are leaving the company. With the calculator and the detailed explanation of the rules and calculations, you now have a clear idea of how much you will get from your employer. Good Luck!

Disclaimer: While this Gratuity calculator follows the criteria based on the UAE Labor Law and guidelines from the UAE Ministry of Human Resources and Emiratization (MOHRE), it is not an official government calculator. The results provided are for informational purposes only and should be considered as estimates. For precise calculations and official confirmations, please consult with your HR department or legal advisor.