End-of-Service Benefits in the UAE: A Guide for Employees

What are End-of-Service Benefits?

End-of-service benefits (EOS) are payments legally owed to employees upon the conclusion of their employment, provided specific conditions outlined in the UAE Labour Law are met. These benefits recognize an employee's tenure and loyalty to the organization.

Employees become eligible for gratuity payments after completing at least one continuous year of service with their employer. The length of service is calculated based on actual working days and excludes extended periods of leave, such as sabbaticals.

The gratuity calculation is as follows:

• 1 to 5 years of service: Employees are entitled to 21 days’ pay per year, based on their final basic salary.
• More than 5 years of service: Employees receive 30 days’ pay per year for the period exceeding 5 years.

The total lump sum is determined by the duration of employment, subject to the maximum limit of two years’ basic salary.

Who is Eligible for End-of-Service Benefits in the UAE?

The regulations outlined in Federal Decree Law No. 33 of 2021 Concerning the Regulation of Labour Relations apply exclusively to employees in the private sector. Public sector employees and those working under different contractual agreements may have separate rules.

How Are End-of-Service Benefits Calculated?

To determine your gratuity entitlement:

1. For employees with 1 to 5 years of service:
   • Gratuity = 21 days of basic salary for each year of service.
2. For employees with more than 5 years of service:
   • Gratuity = 21 days of basic salary per year for the first 5 years, plus 30 days of basic salary for each additional year.

Example Calculation:

For an employee with a basic monthly salary of AED 10,000:

• Daily wage: AED 10,000 ÷ 30 = AED 333.33
• Gratuity for up to 5 years: AED 333.33 x 21 = AED 7,000 (per year of service)
• Gratuity for years exceeding 5 years: AED 333.33 x 30 = AED 10,000 (per year of service)

Important Note: The total gratuity payment cannot exceed the equivalent of two years’ basic salary.

Additional Considerations

Gratuity entitlement is subject to conditions and may vary based on the employment contract, resignation circumstances, and company policies. Always consult your employer or HR department for specific details and clarifications regarding your end-of-service benefits.

At Ninjaz, we are here to guide you through every step of your business and employment journey in the UAE. Contact us for more details on compliance with UAE Labour Law and related matters.