The Ministry of Human Resources and Emiratisation (“MoHRE”) of UAE through a tweet on 10^th January 2023, confirmed that the gratuity laws in UAE have had some recent updates. The tweet reads - A full-time employee in the private sector who has completed a year or more of continuous service is entitled to an end-of-service gratuity at the end of their service, however, unpaid leave days shall not be counted while calculating the gratuity. Clauses (2) to (7) of Article 51 of the UAE labour law describes the method of ascertaining and paying the end of service benefits for expatriates employed in the private sector.

The employee is entitled to gratuity for the served fraction of a year. However, the employee is entitled to claim this benefit only if he/she has completed one year of continuous service in the company. The end of service gratuity is calculated based on the last basic salary to which the employee was entitled to during the course of his/her employment.

The UAE law requires the employer to pay the said end of service gratuity within 14 days from the date of termination of the employment contract. Further, any sum of money which the employee may owe to the employer can be lawfully deducted from the end of term gratuity payment, before being given to him/her.

The Government Portal of United Arab Emirates states that “A worker who has spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service.” Further, “the days of absence from work without pay shall not be included in the calculation of the period of service”.

The calculation of end of term gratuity service in UAE works as the following according to the Government Portal –

• If a worker has served for less than 1 year, he is not entitled to any gratuity pay.
• If a worker has served for more than 1 year but less than 5 years, he is entitled to full gratuity pay based on 21 days' salary for each year of work.
• If a worker has served more than 5 years, he is entitled to full gratuity of 30 days' salary for each year of work following the first five years.

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