In the United Arab Emirates (UAE), gratuity is a payment that employers make to their employees at the end of their employment contract as a form of recognition for their services. The gratuity law is governed by the Federal Law No. 8 of 1980, also known as the UAE Labour Law.
Employees who are on a limited contract in the UAE are entitled to gratuity payment at the end of their employment contract, provided they have completed one year of continuous service with their employer. The gratuity amount is calculated on the basis of the employee`s basic salary, and the length of their service with the employer.
The gratuity payment is calculated as follows:
– For employees who have completed one year but less than five years of service, they are entitled to receive 21 days of basic salary for each year of service.
– For employees who have completed five years or more of service, they are entitled to receive 30 days of basic salary for each year of service.
For example, if an employee`s basic salary is AED 5,000 and they have completed five years of service, their gratuity payment would be calculated as follows: 30 days x AED 5,000 = AED 150,000. This means that the employee would be entitled to receive AED 150,000 as gratuity payment at the end of their employment contract.
It is important to note that the gratuity payment is based on the employee`s basic salary and does not include any allowances or bonuses. Also, if the employee resigns from their job before completing one year of service, they are not entitled to receive gratuity payment.
Employers in the UAE are legally required to pay gratuity to their employees at the end of their employment contract. Failure to make the payment can result in legal action being taken against the employer.
In conclusion, gratuity payment is an important entitlement for employees on a limited contract in the UAE. Employers are required by law to make the payment based on the employee`s basic salary and length of service with the company. Understanding the gratuity law is vital for both employers and employees to ensure fair treatment and compensation.