As per the UAE labor law, gratuity calculation is done based on the type of contract under which the employee was employed.

This article explains how to calculate gratuity for an unlimited contract i.e. a contract with an end date. Gratuity calculation for a limited contract is explained here.

Less than 1 year of service

Leaving work before completing one (1) year of service means that you are not entitled to any gratuity pay.

Between 1 year and 3 years of service

Employee is entitled to one-third of gratuity pay based on 21 days gratuity pay.

E.g. Employee with a basic salary AED 10,000 who has completed one year of work

10,000/30 = AED 333.30

AED 333.30*21 = AED 6,936.30

1/3*6,936.30 = AED 2,333.10

Between 3 years and 5 years of service

Employee is entitled to two-thirds of gratuity pay based on 21 days gratuity pay.

E.g. Employee with a basic salary AED 10,000 who has completed two years of work

10,000/30 = AED 333.30

AED 333.30*21 = AED 6,936.30

2/3*6,936.30 = AED 4,666.20

5 or more years of service

Employee is entitled to full gratuity pay based on 21 days gratuity pay for each year of service above five years.

E.g. Employee with a basic salary AED 10,000 who has completed five years of work.

10,000/30 = AED 333.30

AED 333.30*21 = AED 6,936.30

Note: These calculations are not to be treated as law, they are for your reference only. For any disputes or further clarification, contact the UAE Ministry of Human Resources and Emiratisation.

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