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How To Calculate Your End-Of-Service Pay in UAE

If you had no choice but to leave your current work, don’t worry because your contract is binding until you receive your end of contract pay. Whether it is your first time to resign or you don’t have an idea how to compute the compensation you’ll be getting after your contract ends, we are here to help you find that out.

Also Read: UAE Guide When An Employer Doesn’t Pay You on Time

The end-of-service pay is also known as the gratuity pay. You will hear this term every time you encounter a colleague leaving your company or you resign yourself. In the UAE, the determination of your gratuity pay is easy and simple. All you have to do is know what your contract says about your service period. To guide you on how to compute for your end of service pay, here’s what you need to know.

Contract Payment

Gratuity Calculator: Determine Your Contract Type

Determining your contract type is an essential part of the process. Basically, there are two types of contracts you are likely to encounter in UAE.

A limited contract is an employment contract that has fix terms. This is a legal document that says you agree with your employer to stay at a company for a certain number of years with an end date. For instance, you need to stay at your current company for 2 years then after that period, you are good to go and find another employer. If you resign before your limited contract ends, you may be banned from working in the country or pay a certain amount of compensation to your employer.

Unlimited Contract, unlike the limited one, has no end date. To be able to end your contract, you may be required to render a 1 to a 3-month notice period.

Compute Your Gratuity Pay

Your gratuity pay is based on your most recent salary. Unless you break any provisions in your employment contract, you are entitled to an end-of-service compensation once you are terminated from work. The following are the formulas to compute for your pay.

Also Read: Things You Should Know About UAE if You’re a First-Time Visitor

Limited Contract

Basic pay ÷30 days = Daily wage
Daily wage x 21 days or 30 days (whichever is applicable) = full gratuity pay
Full gratuity pay x years of service = gratuity pay to be received
If did not complete a year of service, you are not entitled to gratuity pay.
If you complete between 1 to 5 years of service, compute by using the formula above: daily wage x 21 days for each year then multiply by years of your service.
If you complete 5 years of service or more, compute by using the formula above: daily wage x 30 days for each year then multiply by years of your service.

Unlimited Contract

Basic pay ÷30 days = Daily wage
Daily wage x 21 days or 30 days (whichever is applicable) = full gratuity pay
Full gratuity pay x (1/3), (2/3), or (3/3) (whichever is applicable = gratuity pay to be received
If did not complete a year of service, you are not entitled to gratuity pay.
If you complete between 1 to 3 years of service, compute by using the formula above: daily wage x 21 days then multiply by 1/3.
If you complete between 3 to 5 years of service or more, compute by using the formula above: daily wage x 21 days then multiply by 2/3.
If you complete 5 years of service or more, compute by using the formula above: daily wage x 21 days then multiply by 3/3. This means you will take home your full gratuity pay.

To help guide your family and friends here in the UAE, don’t forget to share this information. Your right as an employee only stops when your employer take full responsibility until the end of your contract.

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