UAE Labour Law Working Hours In Dubai, Annual Leave, Working Days from www.dubai-online.com
Introduction
The United Arab Emirates (UAE) has one of the most comprehensive labour laws in the world. One of the key provisions of the UAE labour law is the gratuity payment. Gratuity is a payment made by an employer to an employee as a reward for their service. In this article, we will discuss the calculation of gratuity as per the UAE labour law.
What is Gratuity?
Gratuity is a payment made by an employer to an employee at the end of their service. The payment is made as a reward for the employee's service to the company. Gratuity is also known as end-of-service benefit or severance pay.
Who is Eligible for Gratuity?
All employees who have completed at least one year of continuous service with the same employer are eligible for gratuity payment. This includes all full-time, part-time, and temporary employees.
How is Gratuity Calculated?
Gratuity is calculated based on the employee's basic salary. The basic salary is the employee's salary excluding any allowances or overtime pay. The gratuity payment is calculated as follows: For employees who have completed less than five years of service: - 21 days' basic salary for each year of service For employees who have completed five or more years of service: - 30 days' basic salary for each year of service for the first five years - 45 days' basic salary for each year of service after the first five years
Example Calculation
Let's assume that an employee has a basic salary of AED 5,000 and has completed seven years of service. The gratuity payment would be calculated as follows: - 30 days' basic salary for each year of service for the first five years: 30 x 5 x 5,000 = AED 75,000 - 45 days' basic salary for each year of service after the first five years: 45 x 2 x 5,000 = AED 45,000 - Total gratuity payment: AED 120,000
When is Gratuity Paid?
Gratuity is paid to an employee at the end of their service. If an employee resigns, their gratuity payment should be made within 30 days of their last day of service. If an employee is terminated, their gratuity payment should be made immediately.
Can Gratuity be Calculated on the Total Salary?
No, gratuity can only be calculated based on the employee's basic salary. Any allowances or overtime pay cannot be included in the gratuity calculation.
What Happens if an Employee Dies?
If an employee dies while in service, their gratuity payment will be made to their legal heirs.
Conclusion
Gratuity is an important benefit for employees in the UAE. It is a reward for their service to the company and is calculated based on their basic salary. Employers in the UAE are required to pay gratuity to their employees at the end of their service.
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