How is gratuity calculated in the UAE for a limited contract
As per the UAE labor law, gratuity calculation is done based on the type of contract under which the employee was employed.
This article explains how to calculate gratuity for a limited contract i.e. a contract with an end date. Gratuity calculation for an unlimited contract is explained here.
Less than 1 year of service
Leaving work before completing one (1) year of service means that you are not entitled to any gratuity pay.
Between 1 year and 5 years of service
The employee is entitled to full gratuity pay based on 21 21-day salary for each year of work.
E.g. Employee with a basic salary of AED 10,000 who has completed one year of work
10,000/30 = AED 333.33
AED 333.33*21*1 = AED 7,000
5 or more years of service
The employee is entitled to full gratuity pay based on a 30-day salary for each year of work following the first five years.
E.g. Employee with a basic salary of AED 10,000 who has completed five years of work.
10,000/30 = AED 333.33
AED 333.33*21*5 = AED 35,000
E.g. Employee with a basic salary of AED 10,000 who has completed seven years of work.
10,000/30 = AED 333.33
AED 333.33*21*5 = AED 35,000
AED 333.33*30*2 = AED 20,000
Note: These calculations are not to be treated as law, they are for your reference only. For any disputes or further clarification, contact the UAE Ministry of Human Resources and Emiratization.