To give the benefits to employees working in UAE the government implemented strict labor laws to safe the rights of both employees and employer. Ministry of Labour is a primary ministry which has hold of all labour laws in UAE. Companies firms and organizations in UAE must have to obey Saudi Labour laws in order to do work in UAE. Every company must know the rights of their employees whether of they were small scale worker or large position holders workers. The set of Rules provided by Ministry of Labour provides every worker the benefits of gratuity after end of their service but the calculation of Gratuity is not such easy task there were certain labour laws which were applicable while this calculation and every employer must obey those laws to give Gratuity amount. If you still don’t know the meaning of Word Gratuity than let assume that Gratuity is called End of service Benefits.
Go through these short form Gratuity Calculations Laws with full definitions. UAE labour laws consists of various articles which is sometimes difficult for those ordinary employees every employees who resigns or terminates JOB contract must tries first to know his Gratuity/End of service Benefits so that he don’t make any mistake Like If any employee don’t knows about the Laws of unlimited contract and resigns from his JOB before complete one year and ask his employer to give him Gratuity than employer tell him that as you resigns before one year I am unable to give you any single amount of Gratuity and in this case employees hands are totally empty as laws are laws and any ordinary employee don’t do nothing as they don’t have Knowledge about those Laws.
Further gratuity is subject to the nature of contract you have if you contract is limited than separate laws were applicable on you while if you own Unlimited contract than this contract has different laws.
Basic Gratuity Calculation Rule:
According to the Labour law article 132 Gratuity is calculated on the basis of last Drawn wage. Also the employee must have to complete at least 1 year of job period to get end of service remuneration. The days of absence without pay is not included in this period.
Lets go through the Gratuity Calculation Under Limited Contract with Detail scenarios and illustration of practical life examples.
Calculation of Gratuity Unlimited Contract
I disuss here almost 8 situations with all rules applicable situation you can see whether you will be able to fit on these below situation and can easily calculate you Gratutiy:
If Employee Resigns Before completion 1 year:
Under unlimited contract if employees get ready to resigns from his job before completing his 1st year he is not applicable to any kind of Gratuity or End of service benefits according to labour law.
Resignation from job more than 1 year but less than 3 years:
Any employee of company wants to resigns he complete 1 year of service but not more than 3 years he/she is eligible to get 1/3rd of 21 days basic salary for every year of his/her service.
Basic salary = AED 11,000 per month
Date of Join = 01-01-2012
Ending date = 31-03-2013
Total Working days = 455 days
Total Y = 1.25 years
21 days’ Basic salary = AED 7,700
Wages per day = AED 11,000*12/365= 361.64
Amount of wages for number of years: 21*361.64*1.25 = 9,493.05
Gratuity Amount: 1/3*9,493.05 = 3,164.5
Resignation from job more than 3 year but less than 5 years:
If worker/employee is employed against unlimited contract and complete 3 years of service but resigns before completing 5 year than he/she will be qualified for gratuity amount of 2/3rd of the 21 days basic salary for each year of his/her service.
Basic salary >AED 10,000 per month
Joining date > 01-01-2010
End date > 31-03-2013
Total number of days worked > 1,186 days
Total number of years worked > 3.25 years
21 days’ Basic salary > AED 6904.1
Wages per day > AED 10,000*12/365= 328.76
Amount of wage for number of years > 21*328.76*3.25 = 22,433
Gratuity Amount> 2/3*22,433 = 14,955.75
Resignation from job more than 5 year:
In this case any employee on unlimited contract completes 5 year of service and after that if he/she resigns from his job than gratuity amount 21 days basic salary is given. But service after 5 years is eligible gratuity for 30 days of basic salary amount.
Basic salary > AED 12,000 per month
Joining date > 01-01-2008
End date > 31-03-2014
Total number of days worked (31-03-2014-01-01-2008+1)= 2281 days
Total number of years he worked>2281/365= 6.25
21 days’ Basic salary > 394.52*21= AED 8,284
30 days’ basic salary > 394.52*30= AED 11,835.6
Wages per day > AED 10,000*12/365= 394.52
Total amount gratuity> 21*394.52*5=41,424.6+(2,218/365-5)*30*328.76=54168 AED