Stock Gratuity
The end-of-service gratuity is calculated based on the final basic salary of the employee. What are some of the other factors that affect the total amount of gratuity you receive? Picture use for illustrative purposes only. Image Credit: Shutterstock

Dubai: If you are about to leave your job, one of the many questions you may have is: What will be my end-of-service benefits?

While the UAE’s Labour Law has detailed regulations on gratuity for full-time private sector employees, there are certain criteria and regulations that determine whether or not you are eligible to receive gratuity and how your gratuity amount will be calculated.

For example, in a post on its social media accounts, the Ministry of Human Resources and Emiratisation (MOHRE), raised awareness about how taking unpaid leave may affect the gratuity calculation.

The Ministry tweeted: “A full-time employee in the private sector who has completed a year or more of continuous service is entitled to an end-of-service gratuity at the end of their service, however, unpaid leave days are not included in calculating the gratuity.”

Knowing the law

Article 51 of the UAE Labour Law – Federal Decree Law No. 33 of 2021 – stipulates how severance pay is calculated for employees in the private sector. As per Clause 4 of the Article, “days of absence from work without pay shall not be counted within the period of service”.

Similarly, Article 33 (2) of the law on unpaid leaves, too states that unpaid leave will not be counted in the worker’s period of service.

Article 33 – Unpaid leave – of Federal Decree Law No. 33 of 2021 (UAE Labour Law)
1. The worker may, after obtaining the approval of the employer, have an unpaid leave, other than that referred to herein.
2. The leave referred to in the paragraph above shall not be counted in the period of service of the worker with the employer and within the Pension System according to the relevant legislation in force.

Four factors that affect gratuity calculation

In its social media post, MOHRE also highlighted the following factors that affect how end-of-service gratuity is calculated for private sector employees:

1. The end-of-service gratuity is calculated based on the final basic salary of the employee.

2. The employee is entitled to a gratuity according to working days, provided that one continuous year of service is completed.

3. The employee is entitled to a 21-day salary for each year for the first five years of service.

4. The employee is entitled to a 30-day salary for each year after five years of service.

To read a detailed guide of what the UAE Labour Law states about gratuity calculation, click here.

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