GRATUITY CALCULATOR

Gratuity is provided to the employee for the services provided to the company. It is an end of service benefit that is offered when an employee works in the company for more than a year. It is considered as an important part of the salary. The end of service gratuity amount provided depends on the employee’s monthly basic salary. Usually, it is provided during retirement but it can be availed even before that and it totally depends on the terms and conditions of the organization.

• The employee must be working in the company for more than a year
• The employee must provide continuous services in the organization for more than a year
• The employee must be resigning by himself
• If an employee is leaving the organization before the end of the contract then he is not eligible
• Both UAE nationals and expats are eligible

It is important for every employee to understand how is the gratuity provided and on what basis. The gratuity provided depends on the employment contract type i.e Limited contract and Unlimited contract.

Limited contract: If an employee agrees to work in the company for a particular time period then it is a limited contract. This contract can be extended or terminated on mutual understanding.

Unlimited contract: If an employee works in a company without any end date, it comes under Unlimited contract type.

Gratuity calculation for a Limited Contract-
Here the number of years an employee worked in an organization should be considered.

• If an employee worked for 1-5 years then 21 days is considered to calculate gratuity
• If an employee worked for more than 5 years then 30 days is considered to calculate gratuity

Procedure

• Calculate your daily wage
• Multiply it with 21 or 30(depending on the work experience in that company)
• Multiply it with the total number of service in that company

Let’s assume your basic salary is AED 25,000 and worked in the company for 4 years

• Daily wage: 25000/30= 833.33
• Multiply it with 21(as the total work period is less than 5 years): 833.33*21= 17,499.33
• Multiply with 4(total work time in the company): 17499*4 = 69999

The gratuity that would be provided at the end of the service i.e. 4 years(Limited contract) is AED 69999.

Gratuity calculation for an Unlimited Contract-

• If an employee has worked for 1-3 yrs in the company, ⅓ of 21 days salary is considered each year and calculated.
• If an employee has worked for 3-5 yrs in the company, ⅔ of 21 days salary is considered each year and calculated.
• If an employee has worked for more than 5 yrs in the company, 30 days salary is considered each year and calculated.

Procedure

• Calculate your daily wage
• Multiply it with 21 or 30(depending on the work experience in that company)
• Consider only ⅓ rd or ⅔ rd of the result(depending on the work time)
• Multiply it with the total number of service in that company

Example:
Let’s assume your basic salary is AED 25,000 and worked in the company for 4 years

• Daily wage: 25000/30= 833.33
• Multiply it with 21(as the total work period is less than 5 years): 833.33*21= 17,499.33
• Considering ⅔ rd of the result(as work experience is 4 years): ⅔ of 17499 = 11666
• Multiply with 4(total work time in the company): 11666*4 = 46664

The gratuity that would be provided at the end of the service i.e. 4 years(Unlimited contract) is AED 46664.

• Gratuity is calculated on considering basic salary only
• Make sure your employer doesn’t manipulate your basic salary by increasing other expenses
• If an employee has to pay any money to the company, then it can be compensated with the gratuity if he eligible for it
• An employee with less than 1-year experience in the company is not eligible for gratuity
• An employer has the right to disqualify an employee for gratuity if he fails to perform his basic activities
• If an employee causes any material damage or loss then he will not be eligible for gratuity