Gratuity is the part everyone knows about, and it is usually not
the whole of what you are owed. A final settlement is the total of
several separate entitlements, and each is calculated on a different
basis, which is exactly why they get missed.
The components
| End of service gratuity | 21 days of basic salary
per year for the first five years, 30 days per year after that,
capped at two years' total pay. Based on basic salary
only. |
|---|
| Unused annual leave | Accrued but untaken leave is
paid out. Entitlement is 30 calendar days a year after one year of
service, and 2 days a month between six and twelve
months. |
|---|
| Notice period | Either worked or paid in lieu.
Contractual notice is typically 30 to 90 days. If the employer
terminates without notice, pay in lieu is due. |
|---|
| Outstanding wages | Salary for days worked in the
final month, plus any approved overtime, commission or allowances
already earned. |
|---|
| Repatriation | Where the contract provides for it,
the cost of a return flight to your home country. |
|---|
Basic salary is the number that matters
Gratuity is calculated on basic salary, not on your total
package. On a typical UAE structure where basic is around 60% of the
gross, that difference is large. A gross salary of AED 20,000 with a
basic of AED 12,000 produces a gratuity based on the 12,000. It is
worth checking what your contract actually states as basic before
estimating anything.
Timing
Final settlement is due within fourteen days of the end of the
employment relationship. Handing back company property and
completing clearance are normal parts of the process, but they do
not suspend the obligation to settle indefinitely.
What can reduce it
Resigning during a limited period of service can affect gratuity
entitlement, and dismissal for one of the specific grounds set out
in the labour law can remove it. Unpaid leave does not accrue
gratuity or annual leave. Loans and documented advances are normally
set off against the final figure.
If your employer disputes the amount or does not pay, the route
is a complaint to the Ministry of Human Resources and Emiratisation,
which attempts settlement before the matter moves to the labour
court. The labour law guide sets out
that process, and the
contract analyzer checks
whether your contract contains clauses that no longer comply.
What is included in a UAE final settlement?
End of service gratuity, payment for unused annual leave, notice period or pay in lieu, outstanding wages for days worked, and repatriation costs where the contract provides for them.
Is gratuity calculated on basic salary or total salary?
Basic salary only. On a typical package where basic is around 60% of gross, this makes a substantial difference to the final figure.
How long does an employer have to pay a final settlement?
Within fourteen days of the end of the employment relationship. Clearance formalities do not extend that obligation indefinitely.
Do I lose gratuity if I resign?
Not automatically. Resignation can affect entitlement depending on length of service, and dismissal on specific grounds set out in the labour law can remove it.