End of service gratuity calculation

An employee whose contract is terminated or expires and who has completed at least one (1) year of service is generally entitled to an end-of-service gratuity.

Under the UAE Labor Law, the end-of-service gratuity is computed at twenty-one (21) days' basic wage for each of the employee's first five (5) years of service, and thirty (30) days' basic wage for each year thereafter.

End-of-service gratuities are capped at two (2) years' basic wage salary. It is computed proportionately for any partial year of employment and generally at the employee's last wage.

An employee is not entitled to an end of service gratuity where he/ she is dismissed for a cause.

In addition, under the UAE Labor Law, where the employee resigns and the employment contract is for an indefinite period, the gratuity entitlement is reducedas follows:

• if the employee has more than one (1) year's service but less than three (3) years' service, the employee is entitled to one-third (1/3) of the gratuity;
• Where the employee has more than three (3) years' but less than five (5) years' service, he/she is entitled to two-thirds (2/3) of the gratuity;
• Where the employee has more than five (5) years' service, he/ she is entitled to the full gratuity payment.