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End of service benefits for employees in the private sector

This page provides information about end of service benefits for expatriate workers in the UAE.

Provisions for end of service benefits

If the employee resigns of his or her own free will before completing one year, then they will not be entitled to any gratuity pay.

 

The worker is entitled to a gratuity for the served fraction of a year, provided that he completes one year of continuous service.

 

The end of service gratuity is calculated on basis of last wage which the employee was entitled to, namely the basic salary. Hence, it will not include allowances such as housing, conveyance, utilities, furniture etc.

 

If the employee owes any money to the employer, the employer may deduct the amount from the employee's gratuity.

 

Useful links

Calculations for gratuity pay

Under limited contract

An employee who has spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service. The days of absence from work without pay shall not be included in the calculation of the period of service and the gratuity shall be calculated as follows:

  • If an employee has served for less than 1 year, he is not entitled to any gratuity pay.

  • If an employee has served for more than 1 year but less than 5 years, he is entitled to full gratuity pay based on 21 days' salary for each year of work.

  • If an employee has served more than 5 years, he is entitled to full gratuity of 30 days' salary for each year of work following the first five years.

In all cases, the total gratuity shall not exceed the wage of two years.

 

Under unlimited Contract

In the event where the employer terminates an unlimited contract, calculation will be as follows:

  • If an employee has served for less than 1 year, he is not entitled to any gratuity pay.
  • If an employee has served more than 1 year but less than 5 years, he is entitled to 21 calendar days' basic salary for each year of the first five years of work.
  • If an employee has served more than 5 years, he is entitled to 30 calendar days' basic salary for each additional year, provided the entire compensation does not exceed two years' pay.

In the event where the employee under an unlimited contract resigns, calculation will be as follows:

  • If an employee resigns before completing 1 year of service, he is not entitled to any gratuity pay.
  • If an employee has served between 1 and 3 years, he is entitled to one third (1/3) of 21 days' basic salary as gratuity pay.
  • If an employee has served between 3 and 5 years, he is entitled to two-thirds (2/3) of 21 days' basic salary as gratuity pay.
  • If an employee has served more than 5 years, he is entitled to full 21 days' basic salary as gratuity pay.

 

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Updated on 02 Sep 2019

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