End of service benefits under full time contracts
End of service benefits for Emiratis working in the private sector will be in accordance with the legislation regulating the pensions and social securities in the UAE.
As per Article 51 of the UAE Labour Law, end of service benefits for foreign employees working in the private sector will be as follows:
- 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.
- All end of service entitlements must be paid within 14 days from the contract’s end date.
Calculations for gratuity pay
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 other types of employment
As per Article 30 of the Cabinet Resolution No. 1 of 2022 on the Implementation of the Regulation of Federal Decree Law No. 33 of 2021 Regarding the Regulation of Labour Relations, the end of service benefits for employees in part time contracts or other types of work arrangements are calculated pursuant to the following:
The number of working hours in the employment contract per year divided by the number of working hours in the full time contract per year multiplied by 100 equal to the percentage on which the end of service benefit should be calculated. Then this percentage should be multiplied by the value of the end of service benefit due for the full time contract.
Find more provisions about the entitlements of the employees in Article 51, 52 and 53 of the Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector, the ‘UAE Labour Law’.
Useful links from Ministry of Human Resources and Emiratisation: