How is Gratuity calculated?1 min read

In the United Arab Emirates (UAE), gratuity is a benefit paid to employees at the end of their employment. It is calculated based on the employee’s length of service and their final basic salary. The formula for calculating gratuity in the UAE is as follows:

Gratuity = (21 days x basic salary x number of years of service) / 30

For example, if an employee has a basic salary of AED 10,000 per month. In addition, he has worked for the company for 5 years. Accordingly, their gratuity would be calculated as follows:

End of Services Benefits = (21 days x 6,000 AED x 5 years) / 30

EOSB = 21,000 AED

At the end of the employee’s employment, gratuity is paid in a lump sum and is subject to tax. It is important to note that this is only a general guide to calculating gratuity in the UAE. The specific rules and regulations may vary depending on the employer and the employee’s contract of employment. We at BHMJ Associates always strive to provide the best specific advice on calculating gratuity in the UAE.