5 Gratuity Payout Rules in the UAE That Most Employees Are Shocked To Learn!

Gratuity, also known as end-of-service benefits, is a mandatory payment that employers in the UAE must provide to their employees upon the termination of their employment. Understanding the rules and calculations for gratuity payouts is crucial for employers and employees. Here are five key things to know about gratuity payouts in the UAE. 1. Eligibility and Calculation Gratuity applies to employees who have completed at least one year of continuous service with their employer. The calculation of gratuity is based on the employee’s basic salary and the duration of their service. According to UAE Labour Law, employees are entitled to 21 days of basic pay for the first five years of service and 30 days of basic pay for each year thereafter. Detailed Breakdown of Calculation: For example, if an employee’s basic monthly salary is AED 10,000 and they have worked for six years, their gratuity will be calculated as follows: For the first five years: 21 days x 10,000 / 30 = AED 7,000 per year. Total for five years = 7,000 x 5 = AED 35,000. For