End of Service Gratuity in the UAE: Understanding Your Rights and Benefits as an Employee with a Limited Contract
If you are an expat working in the United Arab Emirates (UAE) with a limited contract, it is important to be aware of your end of service gratuity rights and benefits. The end of service gratuity is a sum of money paid by employers to their employees after the completion of their employment contract, and it is one of the key benefits that employees in the UAE receive. In this article, we’ll explore what end of service gratuity is, how it works, and what you need to know as an employee with a limited contract.
What is End of Service Gratuity?
End of service gratuity is a payment made to an employee by their employer at the end of their employment contract. The gratuity is calculated based on the employee’s length of service and their last basic salary. The purpose of the gratuity is to provide financial support for employees who are leaving their job, whether voluntarily or involuntarily, and to reward them for their loyalty and service to the employer.
How Does End of Service Gratuity Work?
End of service gratuity is a mandatory benefit that employers in the UAE are required to provide to their employees. The gratuity is calculated based on the employee’s length of service with the company, and the amount is based on their last basic salary. The length of service is calculated in years, with partial years counted as a full year, and the gratuity calculation is as follows:
– 21 days’ worth of basic pay for each year of service for the first five years of employment
– 30 days’ worth of basic pay for each subsequent year of service
Therefore, if an employee worked for a company for six years and their last basic salary was AED 10,000 per month, their end of service gratuity would be:
(21 days x 5 years x AED 10,000) + (30 days x 1 year x AED 10,000) = AED 315,000
It is important to note that end of service gratuity is calculated based on an employee’s last basic salary, which does not include allowances or bonuses. However, if the employee’s commission or bonus is part of their regular salary, it will be included in the calculation.
What You Need to Know as an Employee with a Limited Contract
If you are an employee in the UAE with a limited contract, there are a few things you need to be aware of when it comes to end of service gratuity. Firstly, if you resign from your job before the end of your contract, you may not be entitled to an end of service gratuity. However, if your employer terminates your contract before its expiry, you will be entitled to the gratuity.
Secondly, your end of service gratuity may be reduced if you have breached your contract in any way. For example, if you have been absent from work without a valid reason or have violated any of the terms and conditions of your employment contract, your employer may be able to deduct from your gratuity.
Lastly, if you have completed one year of continuous service with your employer, you will be entitled to an end of service gratuity, regardless of whether you have a limited or unlimited contract.
In Conclusion
End of service gratuity is an important benefit for employees in the UAE, and it provides financial security and support when employees are leaving their job. If you are an expat working in the UAE with a limited contract, it is crucial to be aware of your end of service gratuity rights and benefits to ensure that you receive the correct amount when leaving your job.
