End of service benefits under full time contracts

• UAE nationals

End of service benefits for Emiratis working in the private sector will be in accordance with the legislation regulating the pensions and social securities in the UAE.

As per Article 51 of the UAE Labour Law, end of service benefits for foreign workers working in the private sector will be as follows:

• The worker is entitled to a gratuity for the served fraction of a year, provided that he completes one year of continuous service.
• The end of service gratuity is calculated on basis of last wage which the worker was entitled to, namely the basic salary. Hence, it will not include allowances such as housing, conveyance, utilities, furniture etc.
• If the worker owes any money to the employer, the employer may deduct the amount from the worker's gratuity.
• All end of service entitlements must be paid within 14 days from the contract’s end date.

Calculations for gratuity pay

A worker who has spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service. The days of absence from work without pay shall not be included in the calculation of the period of service and the gratuity shall be calculated as follows:

• If a worker has served for less than 1 year, he is not entitled to any gratuity pay.
• If a worker has served for more than 1 year but less than 5 years, he is entitled to full gratuity pay based on 21 days' salary for each year of work.
• If a worker has served more than 5 years, he is entitled to full gratuity of 30 days' salary for each year of work following the first five years.
  
  

In all cases, the total gratuity shall not exceed the wage of two years.

Optional system for end-of-service gratuities

There is one more system of end-of-service gratuities. Subscribing to it is optional for private sector employers on the mainland and in free zones. Employers participating in the system get the option to choose an employment category and accordingly, pay a monthly contribution.

The gratuities system includes three main investment options. They are:

1. risk-free investment that maintains capital
2. risk-based investment where the risk varies between low, medium and high
3. Sharia-compliant investment.

All employees at different occupational levels and working patterns can benefit from this system. They will receive their savings upon termination of service.

If an employee dies, financial benefits will be given to the legally eligible person.

The system is also open for government sector employees, for savings and investment purposes.

Ministry of Human Resources and Emiratisation in coordination with the Securities and Commodities Authority will be supervising the system and its funds all over the UAE.

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