Below is how you can do the calculation as shared on TimeoutDubai.
What you need to know about UAE gratuity
Using your basic salary (before allowances are added on), you will receive a 21-day salary payment for the first five years of service.
Those who have been working in the same company for more than five years will get 30 days’ worth of their basic for every year past the first five.
That said, after this week’s update, unpaid leave days will be taken off this final total.
The end-of-service gratuity is calculated on the basis of the last basic salary to which you are entitled. It will not include allowances such as housing, conveyance, utilities, furniture etc.
First step: Figure out what contract type you are
According to the UAE Labour Law, they take two types of contracts into consideration when calculating your gratuity.
Limited-term contract
Unlimited term contract
In general, limited-term contracts include the start and end dates of the working period. Unless the contract is purposefully renewed, it will be automatically cancelled when it expires. Think of project workers, who leave the workplace, once the project is complete. While an unlimited-term contract is more flexible and the one more commonly used in the UAE.
When will I not get gratuity?
If you, as an employee, resign of your own free will before completing one full year of work, then you will not be entitled to any gratuity pay.
Doing the math
If you are terminated
In the unfortunate event that you are terminated the calculation will go a little something like this:
If you have served more than one year but less than five years, you are entitled to 21 calendar days’ basic salary for each year of the first five years of work.
If an employee has served over five years, they are entitled to 30 calendar days’ basic salary for each additional year, provided the entire compensation does not exceed two years’ pay.
Your unpaid leave days will not be included.
If you choose to resign
In the event that you resign, the calculation will be as follows:
Again, if you resign before completing one year of service, you are not entitled to any gratuity pay.
If you have served between one and three years, you are entitled to 1/3 of 21 days’ basic salary as gratuity pay.
Employees who have served between three and five years are entitled to 2/3 of 21 days’ basic salary as gratuity pay.
If you have served more than five years, then you are entitled to the full 21 days’ basic salary as gratuity pay.
Your unpaid leave days will not be included.
