You have heard about the new gratuity law in the UAE for 2023 and now you’re lost and you don’t know what it is and how to calculate it? There is nothing to worry about.
In this article, you will find everything about The UAE new labor law gratuity for 2023
Table of Contents
What is the new gratuity law in the UAE 2023?
The new labor law says:
- All contracts are now only allowed to last five years, in accordance with the New Labor Law.
- The calculation for the gratuity in the UAE is based on 21 days of the basic salary for each year of service.
- The worker is entitled to 30 days of gratuity if he has more than five years of service.
In simple words, For the first five years of employment, you will be paid a 21-day salary based on your basic salary (before adjustments are added on).
For every additional year beyond the first five that you have worked for the same company, you will receive 30 days’ worth of your basic pay.
you can download the UAE new labour law 2023 gratuity
How can you calculate the new gratuity law in the UAE for 2023
For the calculation, you will need to consider the following three factors:
- The length of employment.
- The type of contract.
- The last basic salary.
The last basic salary will be used in the calculation, so you must know whether you have a limited or unlimited contract (per the recent regulations, there will only be a limited contract in 2023) before applying. You will also need to know how long you have been employed.
Keep in mind: If one year of continuous service is completed, gratuity is calculated based on working days (unpaid leave days are excluded).
Example of Calculation:
For instance, with a base pay of UAE 5,000:
UAE 5,000 x 30 = UAE 166.66. Your daily salary is 166.66 UAE.
UAE 166.66 times 21 equals UAE 3.500. Therefore, for every year of service, a gratuity entitlement of 21 days’ pay is equal to 3.500 UAE.
Up to five years of service, multiply this amount by that number.
For those who have served longer than five years, the calculation is based on 30 days:
- 166. 6 x 30 = UAE 5,000. For each year of service, the recipient is entitled to 30 days’ salary, up to a maximum of two years’ salary, in the form of a UAE 5,000 gratuity.
What requirements must be met before receiving a gratuity?
You must satisfy the following requirements in order to be eligible for the gratuity:
- A worker is not eligible for gratuity to pay if he or she has worked for the company for less than a year.
- You should have retired from service.
- After five years of continuous employment with the company, you ought to have tendered your resignation.
- The gratuity is paid to the nominee in the event of your death or to you in the event that you become disabled due to illness or an accident.
What if my employer doesn’t want to pay my gratuity?
The new gratuity law states that:
- An employee’s end-of-service benefits must all be paid within 14 days of their employment ending.
- No employee may be let go without receiving end-of-service benefits (EOSB).
- When an employee’s death results in the termination of their employment, their entitlements must be paid to their family after body repatriation expenses have been deducted (where applicable).
- The employer is not permitted to reduce or withhold the gratuity amount based on the employee’s type of contract or date of resignation unless expressly permitted by law.
This is all you need to know about the new gratuity law in the UAE for 2023.