Calculating EOSB/End of Service Benefit or Gratuity (In the UAE)

EOSB/End of Service Benefits or Gratuity is a sum of money paid to an employee at the end of a period of employment

Calculations for Limited Contract gratuity pay in UAE

  • Less than 1 year of service : No gratuity
  • Between 1 year and 5 years of service : 21 days salary
  • 5 or more years of service :30 days salary

Example: An employee who has a BASIC SALARY of 10,000/- resigned after 2 years of work

=BASIC x 12 (months in a year) / 365 = Daily wage X 21 (days pay as per law)
=10,000 X 12 / 365 = 328.7671 x 21 = 6,904.11 (This is for one year)
= 6,904.11 x 2 (years worked) = 13,808.22 (Gratuity for 2 years of work)

 

Calculations for Unlimited Contract gratuity pay

  • Less than 1 year of service : No gratuity
  • Between 1 year and 3 years of service : One third (1/3) of the 21-days gratuity pay.
  • Between 3 years and 5 years of service: Two third (2/3) of the 21-days gratuity pay.
  • 5 or more years of service :Full 21-days gratuity pay.

Example-01: An employee who has a BASIC SALARY of 10,000/- resigned after 2 years of work

=BASIC x 12 (months in a year) / 365 = Daily wage X 21 (days pay as per law) / 3 (1/3rd of 21 day’s pay)
=10,000 X 12 / 365 = 328.7671 x 21 = 6,904.11 / 3 = 2,301.37 (This is for one year)
= 2,301.37 x 2 (years worked) = 4,602.74

Example-02: An employee who has a BASIC SALARY of 10,000/- resigned after 4 years of work

=BASIC x 12 (months in a year) / 365 = Daily wage X 21 (days pay as per law) X 2/3 (2/3rd of 21 day’s pay)
=10,000 X 12 / 365 = 328.7671 x 21 = 6,904.11 x 2/3 = 4602.74 (This is for one year)
= 4602.74 x 4 (years worked) = 18,410.96

Example-03: An employee who has a BASIC SALARY of 10,000/- resigned after 4 years & 3 months (Jan, Feb & Mar) of work

 
=BASIC x 12 (months in a year) / 365 = Daily wage X 21 (days pay as per law) X 2/3 (2/3rd of 21 day’s pay)
=10,000 X 12 / 365 = 328.7671 x 21 = 6,904.11 x 2/3 = 4602.74 (This is for one year)
= 4602.74 x 4 (years worked) = 18,410.96

Calculating for those extra 3 months worked:

= 4,602.74 (2/3 rd pay for one year’s work) / 365 = Pay Per day
= 4,602.74 / 365 = 12.61
= 12.61 x 90 days (Jan=31 + Feb=28 + Mar=31)
= 1,134.92 (for Three months worked)

Therefore, for 4 years and 3 months worked you get 18,410.96 + 1,134.92 =  19,545.88

Note

  • Gratuity pay is calculated based on the most recent salary paid into your account.
  • Gratuity is calculated based on your BASIC salary
  • If you are terminated from your job, unless you break the rules as stated in Article 139 of the Labour Law, the employee is still entitled to gratuity pay.

Click here for UAE Labour Law: end of service gratuity

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