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Gratuity Calculator

by Zoho Payroll
Check out Zoho Payroll
Free Online Gratuity Calculator
A user-friendly tool to compute your gratuity amount for free easily.
AED

As of December 2023, the UAE government has ended unlimited contract employments, requiring employers to convert them to limited contracts and calculate gratuity accordingly.

Your Gratuity amount will be

Disclaimer: Zoho has taken great care and has made every attempt to ensure that the information obtained from the tool is accurate. However, Zoho is not responsible for any errors or omissions and provides no guarantee or warranty on the correctness of the results obtained from the tool. By using this tool you agree not to hold Zoho liable for any issues that arise from incorrect results obtained.

What is gratuity?

Gratuity, or end-of-service benefits, is a lump sum amount paid to employees by the employer upon leaving their organization in the United Arab Emirates (UAE). It is a token of appreciation awarded to employees who have continuously served an organization for a certain period.

Who is eligible for gratuity in UAE?

Article 51 of the UAE's labor law mandates that non-GCC national employees or expatriates working in the private sector receive gratuity upon leaving the organization after completing at least one year of service. However, with the introduction of the new end-of-service benefits schemes, UAE citizens or Emiratis, can also voluntarily register for gratuity.

Note: Employers must subscribe to the new scheme with the Ministry of Human Resources and Emiratisation (MoHRE) to provide end-of-service benefits to Emirati employees.

How is gratuity calculated in UAE?

The gratuity amount is calculated based on the employee's last drawn basic salary, duration of service, and their reason for leaving the company.

If a limited contract employee serves between 1 and 5 years and is terminated, their gratuity is:

Gratuity=(Basic salary * 21 * number of years served)

However, if they serve more than 5 years, their gratuity is:

Gratuity=[Basic salary * 21 * 5] + [Basic salary * 30 * (Years of service - 5)]

Frequently Asked Questions
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What is the gratuity calculator tool?
The online gratuity calculator is a free tool developed by Zoho to help UAE organizations calculate gratuity for their departing employees. Employers can simply enter their employee's basic salary, contract type, and tenure of service into the tool and determine accurate end-of-service benefits amounts.
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When is the last date to pay gratuity?
Gratuity must be paid along with the final settlement within 14 days from the end of the employment contract.
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How is gratuity calculated for unlimited contract employees in the UAE?
For unlimited contract employees, gratuity is calculated based on their length of service and the circumstances of employment termination.
  • If an employee served between 1 and 5 years and is terminated,
    their gratuity equals: (Basic salary per day * 21 * Number of years of service)
  • However, if they've served 1 to 3 years and resign,
    their gratuity equals: (Basic salary per day * 21 * Number of years of service) * (1/3)

Note: The new labour law mandates employers must transition their unlimited contract employees into fixed-term contract employees. The employer and the employee must agree on a fixed term of any duration and convert their employments to limited contracts and calculate gratuity accordingly.

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How is gratuity calculated for employees working in Dubai?

Gratuity calculations in Dubai generally follow the UAE's standard procedure, except for employees within the Dubai International Financial Centre (DIFC) free zone, who follow a different method.

In the DIFC, employers contribute a specific percentage of the employee's basic salary based on their years of service.

  • For employees with 1 to 5 years of service, the formula to determine the employer's contribution is:
    (Basic salary * 5.83 / 100).
  • For those with 5 or more years of service, the employer must provide (Basic salary * 8.93/100) as their gratuity.
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How does the new voluntary end-of-service scheme work?
In November 2023, MoHRE introduced the voluntary end-of-service scheme to extend gratuity to all employees. Under this scheme, the employer must choose an investment fund and select the employees on behalf of whom the employer will contribute funds. Upon leaving the organization, the employee can withdraw the contribution amount and investment returns or continue investing.
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