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Understanding End of Service Gratuity in UAE: A Complete Guide

Home / Business Law / Understanding End of Service Gratuity in UAE: A Complete Guide
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The United Arab Emirates (UAE) is known for its thriving business environment, attracting both local and expatriate talent to work and contribute to the nation’s growth. As an employee in the UAE, it is essential to understand your rights and entitlements – one of which is the End of Service Gratuity. 

This guide aims to provide a comprehensive overview of the gratuity system in the UAE, while also shedding light on the role of labour lawyers in Dubai, who can help you navigate complex employment issues.

What Is End of Service Gratuity

End of Service Gratuity is a form of severance pay mandated by UAE labour law. It is designed to provide financial security to employees who have completed a minimum of one year of continuous service with their employer. The purpose of this gratuity is to reward employees for their loyalty and commitment to the company.

The calculation of the gratuity amount depends on several factors, including the employee’s length of service, salary, and whether they are employed under a limited or unlimited contract. In general, the longer an employee has worked for a company, the higher the gratuity they are entitled to receive.

Calculating End of Service Gratuity

The calculation of End of Service Gratuity varies based on the type of contract an employee is under, as well as their length of service. Below is a breakdown of the different scenarios:

1. Limited Contract Employees

  • 1 to 5 Years: For employees who have worked for a minimum of one year and up to five years, they are entitled to receive 21 days’ basic salary for each year of service.
  • More Than 5 Years: For those who have worked for more than five years, they are entitled to receive 30 days’ basic salary for each additional year of service.

2. Unlimited Contract Employees

  • Minimum 1 Year: For employees who have worked for a minimum of one year and up to five years, they are entitled to receive 21 days’ basic salary for each year of service.
  • More Than 5 Years: For those who have worked for more than five years, they are entitled to receive 30 days’ basic salary for each additional year of service.

It is important to note that the gratuity amount is based on the employee’s basic salary, excluding any allowances or bonuses. Additionally, any disciplinary actions or violations of the employment contract may impact the employee’s eligibility for gratuity or the amount they are entitled to receive.

Exceptions and Deductions

In specific cases, an employee may not be eligible for End of Service Gratuity or may receive a reduced amount. Some of these exceptions and deductions include:

  • Employees who have not completed one full year of continuous service
  • Employees who have been terminated due to misconduct or disciplinary action
  • Employees who resign before completing five years of service under an unlimited contract are entitled to a reduced gratuity amount, calculated based on their length of service
  • Employees who resign under a limited contract are generally not entitled to gratuity unless they have served a minimum of five consecutive years

Seeking Legal Assistance from Labour Lawyers in Dubai

Navigating the complexities of UAE labour law can be challenging, especially when it comes to understanding your rights and entitlements. Labour lawyers in Dubai can provide expert guidance and advice on matters related to End of Service Gratuity and other employment issues.

Whether you are an employee seeking clarification on your gratuity entitlements or an employer needing assistance with calculating and paying gratuity, engaging a qualified labour lawyer can help ensure compliance with UAE labour law and protect your interests.

Conclusion

The End of Service Gratuity in UAE serves as an essential financial benefit for employees who have dedicated their time and effort to an organisation. Understanding the calculations, exceptions, and legal implicationsfurther is crucial for both employees and employers. If you face any challenges or have concerns regarding your gratuity entitlements, seeking assistance from labour lawyers in Dubai can help ensure you are well-informed and protected under UAE labour law. 

If you are searching for dependable labour lawyers in Dubai, your search ends with Al Kabban & Associates. Backed by over three decades of experience, our firm has a proven track record of success and a deep understanding of the legal system and its framework. Let us provide you with the guidance and support you need to navigate the complexities of UAE labour law. Contact us to schedule an appointment!

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