What are end-of-service benefits for employees in the UAE?
End-of-service gratuities are payments legally due to employees upon leaving their employers, subject to satisfying certain conditions prescribed in the UAE Labour Law. Employees are entitled to the end-of-service benefit after completing at least one year of service with an organisation. Tenure is calculated on the number of days worked and does not account for extended periods of leave, i.e. a sabbatical. If you have worked for an organisation between one to five years, you will be paid 21 days of pay based on your final basic salary. Thereafter and for the years of service exceeding five years, you will be entitled to 30 days of pay. The total lump sum you receive is then based on the duration of your employment.
Is every employee in the UAE entitled to gratuity / end-of-service benefits?
The regulations of Federal Decree Law No. 33 of 2021 Concerning the Regulation of Labour Relations (Labour Law) including EOS calculation apply only to Employees/Workers who work in private sectors.
How is gratuity / end-of-service benefits are calculated in the UAE?
The UAE Labour Law entitles employees in the private sector to receive end-of-service benefits, provided the employee has worked for the company for a minimum of a year.
The end-of-service benefits are calculated as follows:
21 days of basic salary for the employee who has completed a full year up to 5 years.
30 days of basic salary for every completed year after the 5 years
For example, for a basic salary of Dh10,000:
a. Dh10,000 ÷ 30 = Dh333.33. Your daily wage is Dh333.33
b. Dh333.33 x 21 = Dh7,000. So 21 days’ salary is Dh7,000 in gratuity entitlement for each year of service. Multiply this figure for every year of service up to five years.
Calculation based on 30 days for those exceeding five years of service:
c. 333.33 x 30 = Dh10,000. So 30 days’ salary is Dh10,000 in gratuity entitlement for each year of service – so long as the total figure does not exceed two years’ total salary figure.
Note: this is merely a guideline and you should consult with your employer for further clarity within your organisation.