Dubai City is known for providing various employment benefits to the workers to assure fair treatment, one of which is the gratuity or end of service gratuity. It’s a lump sum payment given to employees upon completion of their service in the organization. Read further to learn how to calculate your how to calculate gratuity in Dubai accurately.
Understanding gratuity in Dubai
Gratuity is the benefit provided at the end of your service as a mandatory payment given to employees in recognition of their loyalty to the company. It is managed by the Labor Law of the UAE and guarantees financial security to employees at the time of leaving the job.
One has to meet the following conditions to be eligible to receive gratuity in Dubai:
- The employee should have worked for a minimum of one year continuously for the company.
- The employee is on a limited or unlimited employment contract.
- The resignation, termination and retirement of the employee have to be in accordance with the labor law.
How to calculate gratuity in Dubai
Below are some key points that you need to learn if you want to calculate gratuity:
The formula to calculate gratuity amount in Dubai is:
Gratuity = (basic salary ÷ 30) × (total years of service)
It’s the most important part of the calculation and doesn’t include allowances, bonuses, overtime or any other benefits. Just the fixed basic amount.
Years of service
It’s the total duration an employee has worked for an organization and is calculated from the date of joining till the last working day.
Fractional year calculation
If an employee has completed one year of service, any remaining months are considered a full year. For example, if X has worked for 3 years and 8 months, their gratuity calculation will be for 4 years of service so they receive a fair and proportionate amount for their overall period of employment.
Online gratuity calculator in Dubai
There are several online gratuity calculators available that streamline the calculation process. These calculators consider various factors like basic salary, years of service and contract.
Steps to calculate
- Open a Dubai gratuity calculator online.
- Enter your basic salary and choose the type of contract.
- Enter your date of joining and leaving or the present date if still employed.
- Click on the “calculate” to get the result.
Gratuity calculation in Dubai free zone
Dubai has specially designated areas called free zones to attract businesses and investments from other nations. Calculation of gratuity in these free zones have certain rules and regulations that are different from the rest of the city.
Employers in these zones are required to comply with the given regulations to ensure fair compensation and employees can use the specialized calculators to calculate their end-of-service benefits accurately.
Below are a few major free zones in Dubai and their gratuity calculation:
- Dubai Development Authority (DDA)
- Jebel Ali Free Zone Authority (JAFZA)
- Dubai Airport Free Zone Authority (DAFZA)
- Dubai Multi Commodities Centre (DMCC)
Dubai Development Authority (DDA)
The DDA caters to businesses related to healthcare, education and technology and has its specific gratuity calculation tool making sure the workers get fair amount within the DDA jurisdiction.
Jebel Ali Free Zone Authority (JAFZA)
JAFZA is one of the biggest and most prominent free zones in the city with a broad range of industries like logistics, manufacturing and trading. Its calculation system allows employees to utilize the calculator to correctly determine their benefits.
Dubai Airport Free Zone Authority (DAFZA)
This free zone specializes in serving the aviation, logistics and technology sectors. Individuals working under DAFZA can rely on the gratuity calculation guidelines to ensure fair compensation in return of their tenure served.
Dubai Multi Commodities Centre (DMCC)
DMCC is popular for its focus on the trade of gold, diamonds and other valuable commodities. Its calculation guidelines let employees calculate their accurate amount within the zone’s jurisdiction.
Ministry of Labour Dubai- Gratuity calculation
The Ministry of Labour in Dubai plays a crucial role in looking after labor-related matters and ensuring that both employers and employees adhere to them. The body also intervenes in specific cases to resolve any disputes arising regarding the gratuity calculation.
In such cases, either of the parties can file a complaint with the Ministry of Labor and it will review the case to determine the correct amount. The ministry considers the employee’s basic salary, years of service and any special provisions to give a decision. The aim is to resolve the matter timely.
Employers are required to provide accurate information as in case of any violation or discrepancy found, the ministry may take necessary action. Employees also have the right to seek legal alternatives through the labor court to receive their amount.
Employers are required to maintain proper records of their employees’ data that may impact the gratuity calculation. Employees should keep track of their employment history and seek guidance from the Ministry of Labour if needed.
By following the guidelines of the Ministry, both employers and employees can have a fair and transparent calculation. This helps in maintaining a harmonious relationship and protects the rights of employees.
End of service gratuity calculator Dubai: Sample table
Let’s understand how to calculate gratuity with an example. Refer to the table below:
|Basic Salary (AED)
|Years of Service
In the table above there are 3 employees with different basic salaries and total years of service. Remember the gratuity formula? Gratuity = (Basic Salary ÷ 30) × (Years of Service). This is used here for the result.
So employee 1 with a basic salary of AED 5,000 and 3 years tenure would receive a gratuity amount of AED 15,000.
Similarly, the 2nd employee with a basic salary of AED 8,000 and 6 years of experience would get AED 48,000
The 3rd one with a basic salary of AED 10,000 and 12 years’ service is entitled to AED 120,000 as gratuity.
Master gratuity calculation for a better planning
You can get a clear understanding of end-of-service benefits if you know calculating gratuity in Dubai. By considering the relevant factors and using the gratuity calculator, one can guarantee fair and equitable compensation for their dedicated service to the employer.
Extensive guidelines for gratuity calculation have been offered by the UAE Labour Law. Also, thanks to the online calculators and specialized tools available in free zones, individuals can easily know their gratuity amount and accordingly plan for their financial security in the years to come.