Gratuity Calculation In UAE 🇦🇪

It can be difficult to calculate gratuities in United Arab Emirates (UAE) as the laws vary depending on employee’s employment contract or the sector that they work in!

When it comes to gratuity calculation in the UAE, they follow their labor law which states that employees with fixed-term contracts are entitled to gratuity when their contracts end or are terminated 🔚. On the other hand employees with open-ended or indefinite-term contracts have a right to gratuity upon resignation or retirement from their company 🔛 ✋ ️.

The law also stipulates that the calculation of gratuity is based on the salary of the employee and the number of years of service 🔛. According to the UAE labor law the gratuity is calculated at the rate of 21 days’ salary for each year of service. This rate is applicable both to employees with fixed-term and open-ended contracts .

For example, if an employee with a hard and fast-time period agreement has labored for 4 years in the business enterprise and earns a month-to-month profits of AED 10,000, then the gratuity calculation might be as follows:

Gratuity = 21 days’ salary x 4 years of service

Gratuity = 21 days x 10,000 AED x 4

Gratuity = 840,000 AED

Similarly, if an employee with an open-ended contract has worked for 7 years in the company and earns a monthly salary of AED 6,000, then the gratuity calculation will be as follows:

Gratuity = 21 days’ salary x 7 years of service

Gratuity = 21 days x 6,000 AED x 7

Gratuity = 1,026,000 AED

The gratuity calculation for employees with open-ended contracts may also differ slightly depending on the industry in which the employee is employed ❌ 🔛 ️ 👔. For employees in the banking and insurance sector the gratuity calculation is based on the last drawn basic salary and the number of years of service and is calculated at the rate of 15 days’ salary per year of service 🔛 🏦.

For example if an employee with an open-ended contract has worked for 6 years in a banking or insurance company and earns a monthly salary of AED 8,000 then the gratuity calculation will be as follows:

Gratuity = 15 days’ salary x 6 years of service

Gratuity = 15 days x 8,000 AED x 6

Gratuity = 720,000 AED

In addition to the gratuity calculation as stipulated by the UAE labor law, some organizations may also provide additional benefits to their employees ❌ 🇦🇪 🏦 ️. These benefits can include medical insurance housing allowance and other benefits . It is important to note that these benefits are usually provided on a voluntary basis and are provided at the discretion of the company or employer 🔛 ️.

The UAE labor law also stipulates that in the event of termination of an employee’s contract the employer is obligated to pay the gratuity due to the employee within the next 45 days from the date of termination 🇦🇪 📅. Additionally the employer is not allowed to deduct any unpaid salaries or other expenses from the gratuity due to the employee . If the gratuity is not paid within the 45 days the employee is legally entitled to claim double the amount of the gratuity due to him or her .

All in all gratuity calculation in the UAE can be a complex endeavor particularly for employers and employees who are unfamiliar with the labor laws in the country. It is therefore important to ensure that all necessary measures are taken to ensure that gratuity is paid correctly and on time 🔛. … .

Summary

For example if an employee with a fixed-term contract has worked for 4 years in the company and earns a monthly salary of AED 10,000 then the gratuity calculation will be as follows: – – Gratuity = 21 days’ salary x 4 years of service – – Gratuity = 21 days x 10,000 AED x 4 – – Gratuity = 840,000 AED – – Similarly if an employee with an open-ended contract has worked for 7 years in the company and earns a monthly salary of AED 6,000 then the gratuity calculation will be as follows: – – Gratuity = 21 days’ salary x 7 years of service – – Gratuity = 21 days x 6,000 AED x 7 – – Gratuity = 1,026,000 AED – – The gratuity calculation for employees with open-ended contracts may also differ slightly depending on the industry in which the employee is employed. For example if an employee with an open-ended contract has worked for 6 years in a banking or insurance company and earns a monthly salary of AED 8,000 then the gratuity calculation will be as follows: – – Gratuity = 15 days’ salary x 6 years of service – – Gratuity = 15 days x 8,000 AED x 6 – – Gratuity = 720,000 AED – – In addition to the gratuity calculation as stipulated by the UAE labor law some organizations may also provide additional benefits to their employees 🔛 ️ ❌ 🇦🇪 🏦 ..

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