How to calculate gratuity in Dubai?

In the UAE, your gratuity is determined by the following factors:

  • Type of contract (Limited & Unlimited)
  • Total numbers of years in the company
  • Basic salary
  • Reason for resign/termination

Table of Contents

Limited Contract

A limited or fixed-term contract is one in which a person agrees to work with the employer for a set period of years with a specific expiration date. Resigning before the expiration of this term may result in one or more of the following: a work ban, lack of labor rights, or even benefits to the employer.

Unlimited Contract

There is no time limit or number of years with an indefinite contract, so there is no expiration date. However, either party must provide up to three months’ notice before terminating the deal.

Formula (Limited Contract):

  • 1 to 5 years of service

Gratuity= (Basic Salary x 21 days x service years)/30

  • 5 or more years of service

Gratuity= (Basic Salary x 30 days x service years)/30

Formula (Unlimited Contract):

  • 1 to 3 years of service

Gratuity= (Basic Salary x 7 days x service years)/30

  • 3 to 5 years of service

Gratuity= (Basic Salary x 14 days x service years)/30

  • 5 or more years of service

Gratuity= (Basic Salary x 21 days x service years)/30