Gratuity Law in Uae for Unlimited Contract

The United Arab Emirates is a hub of business and tourism, attracting millions of visitors every year. As with any country, there are rules and regulations that visitors and residents must follow. One such rule is the gratuity law.

Gratuity is a form of payment provided to an employee upon the completion of their employment contract. It is a non-discretionary payment that is required by law in the UAE. The amount of gratuity an employee receives is calculated based on the length of their service, with a minimum requirement of one year.

However, the calculation of gratuity differs between limited and unlimited contracts. A limited contract is a contract that has a specific end date, while an unlimited contract has no fixed end date. In the case of an unlimited contract, the employee is entitled to receive gratuity for the entire duration of their employment, regardless of how long they have been employed.

The gratuity payment for an employee on an unlimited contract is based on their total service period, with the calculation determined by the following:

– An employee who has completed one year up to five years of service is entitled to a gratuity payment of 21 days of basic salary for each year worked.

– An employee who has completed more than five years of service is entitled to a gratuity payment of 30 days of basic salary for each year worked.

The basic salary used for the gratuity calculation is the employee’s most recent salary, excluding any bonuses or allowances. The gratuity payment must be made within 30 days of the employee leaving their employment.

It is important to note that employers in the UAE are required by law to provide gratuity payments to their employees. Failure to do so can result in legal action being taken against the employer.

In addition to gratuity, employers in the UAE are also required to provide their employees with end-of-service benefits. These benefits are calculated using the same formula as gratuity, with the employee receiving payment for each year of service. In the case of an unlimited contract, the employee is entitled to receive end-of-service benefits for their entire period of employment.

In conclusion, the gratuity law in the UAE for unlimited contracts is an important aspect of employment that employers and employees must be aware of. The law is in place to ensure that employees receive the benefits they are entitled to upon the completion of their employment contract. If you are an employee in the UAE, it is important to understand your rights and entitlements, and if you are an employer, it is important to ensure that you are meeting your legal obligations.