As an expat working in the United Arab Emirates, it`s essential to understand the gratuity rules for unlimited contract employees. Gratuity, also known as end-of-service benefit, is a payment made by an employer to an employee who has completed a specific period of service with them. The gratuity payment in the UAE is a form of compensation that employers have to pay to their employees when they resign, are terminated, or their contract comes to an end.
If you are working with an unlimited contract in the UAE, you are entitled to a gratuity payout after working with your employer for a minimum of one year. The amount of gratuity is based on the length of your service with the employer. An employee who has completed one year of continuous service is entitled to a gratuity payment of 21 days` basic salary. An employee who has served between one and five years is entitled to a gratuity payment of 30 days` basic salary for each year of service. Employees who have worked with an employer for more than five years are entitled to 40 days of basic salary for each additional year of service.
It is worth noting that any fraction of the year worked beyond the first year is also calculated as a full year when calculating the gratuity payment. For instance, if an employee has worked for three and a half years, the gratuity calculation is based on four years of service. The basic salary used in calculating gratuity does not include bonuses, allowances, or other forms of remuneration.
If you resign or are terminated from your job in the UAE, your gratuity payout will be calculated based on your last basic salary before the end of your employment contract. In case of termination due to gross misconduct, the employer may refuse to pay the gratuity.
It is also essential to note that employers are required by law to pay their employees` gratuity within 30 days of an employee`s service ending. Failure to make the payment within the stipulated period may result in penalties and legal consequences for the employer.
In summary, as an employee with an unlimited contract in the UAE, you are entitled to a gratuity payment after completing one year of service with your employer. The gratuity payment is based on your basic salary and years of service. Understanding these gratuity rules can help you plan your finances and ensure that you are fairly compensated when your employment contract comes to an end.