Gratuity is the end-of-service benefit that every employee in the UAE is entitled to receive upon completion of their employment contract. For unlimited contracts, the calculation depends heavily on whether you resigned or were terminated.
Gratuity on Resignation
Under the UAE labor law, if an employee on an unlimited contract resigns, the gratuity is calculated as follows:
- Less than 1 year: No gratuity entitlement.
- 1 to 3 years: Entitled to 1/3 of 21 days' basic salary for each year of service.
- 3 to 5 years: Entitled to 2/3 of 21 days' basic salary for each year of service.
- Over 5 years: Entitled to full 21 days' basic salary for each year of the first five years, and 30 days' basic salary for each additional year.
Gratuity on Termination
If the employer terminates the contract (other than for gross misconduct), the employee is entitled to full gratuity if they have served more than one year:
- 1 to 5 years: 21 days' basic salary for each year.
- Over 5 years: 21 days for the first five years and 30 days for each year thereafter.