When a Direct Employee's contract ends or is terminated in, they may be entitled to end-of-service benefits. The total compensation depends on factors such as contract type, tenure, nationality, etc.
ADGM
1. Prorated Compensation
Component | Pro-rated calculation |
Salary | Daily salary × Working days in the final month
|
Allowances | Daily allowances × Working days in the final month
|
Contributions | Daily contribution × Calendar days in the final month
|
2. Gratuity Compensation
Gratuity applies only to non-GCC nationals.
Tenure | Gratuity Entitlement |
Less than 1 year | Not eligible |
1 to 5 years | 21 days' basic pay per year of service |
More than 5 years | 30 days' basic pay per year of service (for each year beyond 5 years) |
For part-time contracts a ratio must be multiplied on top of the above calculations. The ratio is calculated as Total part-time contract hours / Total full-time hours in a year. E.g. If the number of part-time contract hours is 1000 and the full-time hours is 2000, then the ratio is 1000/2000 = 0.5.
Example
Scenario
An employee contract is terminated after 7 years of service with a monthly salary of AED 10,000.
Calculate Gratuity
According to UAE labor law, gratuity is calculated as:
Years 1 to 5: 21 days' basic pay per year of service
→ 5 × (10,000 x (21/30)) = AED 35,000Next 2 years: One month’s salary per year
→ 2 × 10,000 = AED 20,000
Total gratuity: AED 75,000
3. Leave Compensation
Calculated as:
Daily wage × Number of unused vacation days
Daily wage = (Monthly basic salary + Monthly Allowances) x 12 months / 260 days
Abu-Dhabi
1. Prorated Compensation
Component | Pro-rated calculation |
Salary | Daily salary × Calendar days in the final month
|
Allowances | Daily allowances × Calendar days in the final month
|
Contributions | If the last contract day is the last day of the month (e.g. Nov, 30), then the full monthly contribution is payable.
Otherwise (e.g. Nov, 29), no contribution is payable. |
2. Gratuity Compensation
Gratuity applies only to non-GCC nationals.
Tenure | Gratuity Entitlement |
Less than 1 year | Not eligible |
1 to 5 years | 21 days' basic pay per year of service |
More than 5 years | 30 days' basic pay per year of service (for each year beyond 5 years) |
For part-time contracts a ratio must be multiplied on top of the above calculations. The ratio is calculated as Total part-time contract hours / Total full-time hours in a year. E.g. If the number of part-time contract hours is 1000 and the full-time hours is 2000, then the ratio is 1000/2000 = 0.5.
Example
Scenario
An employee contract is terminated after 7 years of service with a monthly salary of AED 10,000.
Calculate Gratuity
According to UAE labor law, gratuity is calculated as:
Years 1 to 5: 21 days' basic pay per year of service
→ 5 × (10,000 x (21/30)) = AED 35,000Next 2 years: One month’s salary per year
→ 2 × 10,000 = AED 20,000
Total gratuity: AED 75,000
3. Leave Compensation
Calculated as:
Daily wage × Number of unused vacation days
Daily wage = Monthly basic salary / 30 days
DIFC
1. Prorated Compensation
Component | Pro-rated calculation |
Salary | Daily salary × Working days in the final month
|
Allowances | Daily allowances × Working days in the final month
|
Contributions (DEWS) | Daily contribution × Calendar days in the final month
|
2. Gratuity Compensation
Gratuity is not offered.
3. Leave Compensation
Calculated as:
Daily wage × Number of unused vacation days
Daily wage = (Monthly basic salary + Monthly Allowances) x 12 months / 260 days
Mainland
1. Prorated Compensation
Component | Pro-rated calculation |
Salary | Daily salary × Calendar days in the final month
|
Allowances | Daily allowances × Calendar days in the final month
|
Contributions | If the last contract day is the last day of the month (e.g. Nov, 30), then the full monthly contribution is payable.
Otherwise (e.g. Nov, 29), no contribution is payable. |
2. Gratuity Compensation
Gratuity applies only to non-GCC nationals or employees not enrolled in DEWS (DIFC jurisdiction).
Tenure | Gratuity Entitlement |
Less than 1 year | Not eligible |
1 to 5 years | 21 days' basic pay per year of service |
More than 5 years | 30 days' basic pay per year of service (for each year beyond 5 years) |
For part-time contracts a ratio must be multiplied on top of the above calculations. The ratio is calculated as Total part-time contract hours / Total full-time hours in a year. E.g. If the number of part-time contract hours is 1000 and the full-time hours is 2000, then the ratio is 1000/2000 = 0.5.
Example
Scenario
An employee contract is terminated after 7 years of service with a monthly salary of AED 10,000.
Calculate Gratuity
According to UAE labor law, gratuity is calculated as:
Years 1 to 5: 21 days' basic pay per year of service
→ 5 × (10,000 x (21/30)) = AED 35,000Next 2 years: One month’s salary per year
→ 2 × 10,000 = AED 20,000
Total gratuity: AED 75,000
3. Leave compensation
Calculated as:
Daily wage × Unused vacation days
Daily wage = Monthly basic salary / 30 days