Dubai Labour Law Gratuity Calculation: Everything You Need To Know In 2023
Introduction
As an employee in Dubai, it's important to know your rights and entitlements when it comes to gratuity. Gratuity is a lump sum payment that is paid to employees at the end of their employment contract. It is a mandatory payment as per the UAE Labour Law and is calculated based on the employee's length of service and final basic salary.
What is Gratuity?
Gratuity, also known as end-of-service benefits, is a payment made to employees who have completed their employment contract. It is calculated based on the employee's length of service and final basic salary. The purpose of gratuity is to provide financial security to employees who have served their employer for a certain period of time.
Who is Eligible for Gratuity?
All employees who have completed at least one year of continuous service with their employer are entitled to gratuity. This includes full-time, part-time, and temporary employees.
How is Gratuity Calculated?
Gratuity is calculated based on the employee's length of service and final basic salary. The formula for calculating gratuity is as follows:
Gratuity = (Number of years of service x 21 days of basic salary) ÷ 365
For example, if an employee has worked for 5 years and their final basic salary is AED 5,000, their gratuity would be calculated as follows:
Gratuity = (5 x 21 x 5,000) ÷ 365 = AED 7,192.47
When is Gratuity Paid?
Gratuity is paid to employees at the end of their employment contract. However, if an employee resigns before completing one year of continuous service, they are not entitled to gratuity.
What Happens if an Employee is Terminated?
If an employee is terminated, they are entitled to gratuity based on the length of their service. However, if the termination is due to gross misconduct, the employee may not be entitled to gratuity.
What Happens if an Employee Dies?
If an employee dies while still employed, their gratuity is paid to their legal heirs. The legal heirs are determined by the Shariah law, unless the employee has a will that specifies how their assets should be distributed.
Can Gratuity be Waived or Reduced?
No, gratuity cannot be waived or reduced. It is a mandatory payment as per the UAE Labour Law.
Conclusion
Gratuity is an important entitlement for employees in Dubai. It provides financial security and rewards employees for their service to their employer. As an employee, it's important to be aware of your rights and entitlements when it comes to gratuity.
By understanding how gratuity is calculated and when it is paid, you can ensure that you receive the correct amount of gratuity when you leave your employment.
Remember, gratuity is a mandatory payment and cannot be waived or reduced. If you have any questions or concerns about gratuity, it's important to speak to your employer or seek legal advice.
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