What to Do If Your Gratuity Calculation Seems Incorrect in the UAE?

Have you ever felt that your gratuity calculation in the UAE doesn’t add up? Many employees face confusion or disputes when receiving their end-of-service benefits. If your gratuity seems incorrect, understanding your rights and the steps to resolve the issue is critical.

 In this guide, I’ll walk you through the essential steps to ensure you get what you’re entitled to under UAE Labour Law.

What to Do If Your Gratuity Calculation Seems Incorrect in the UAE (Quick Answer)

If your gratuity calculation in the UAE seems incorrect, review your employment contract, verify calculations under UAE Labour Law, and request a detailed breakdown. Communicate with HR to resolve discrepancies. If unresolved, file a complaint with MOHRE or escalate to the Labour Court. Knowing your rights ensures accurate and fair end-of-service benefits.

How Gratuity is Calculated in the UAE?

Understanding how gratuity is calculated helps you identify errors. Gratuity payments in the UAE are governed by Federal Decree-Law No. 33 of 2021 on Labour Relations. Here are the basics:

1. Eligibility: Employees must complete at least one year of continuous service to qualify for gratuity.
   • Employees terminated for gross misconduct are not eligible.
2. Calculation Formula:
   • For the first five years: 21 days’ basic salary per year of service.
   • Beyond five years: 30 days’ basic salary per year of service.
3. Basic Salary Definition: Gratuity is calculated on the basic salary, excluding allowances like housing, transport, and bonuses.
4. Cap: Gratuity cannot exceed two years’ salary as per UAE law.

Or you can use our own Gratuity Calculator to calculate your Gratuity.

Common Errors in Gratuity Calculations

Mistakes in gratuity calculations often arise due to:

1. Incorrect Basic Salary: Using the total salary instead of the basic salary or vice versa.
2. Incomplete Service Duration: Miscalculating the length of service, especially for partial years.
3. Misclassification of Termination: Treating resignation and termination under different rules.
4. Deductions for Misconduct: Wrongfully reducing gratuity based on unclear or unjustified allegations.

Steps to Take If Your Gratuity Calculation Seems Wrong

Follow these steps to address issues with your gratuity calculation:

1. Review Your Employment Contract

Start by checking your employment contract for specific terms related to gratuity. Ensure your basic salary and other details align with what’s recorded in the payroll system.

• Tip: Pay attention to clauses that specify allowances or bonuses. These do not count towards gratuity.

2. Understand UAE Labour Law

Refer to UAE Labour Law to confirm the calculation formula and eligibility criteria.

• Key Resource: Visit the Ministry of Human Resources and Emiratisation (MOHRE) website for official guidance.

3. Request a Detailed Gratuity Statement

Ask your employer or HR department for a breakdown of your gratuity calculation. This statement should include:

• Basic salary used.
• Total years of service.
• Days calculated for each year.

4. Compare with Your Records

Cross-check the provided details with your personal records, such as:

• Offer letter.
• Salary slips.
• Termination or resignation date.

5. Communicate with HR

If discrepancies persist, raise the issue with your HR department. Be professional and provide evidence of the error.

• Example Email: Clearly explain the mistake, attach relevant documents, and request a revised calculation.

When to File a Complaint with MOHRE?

If your employer fails to address your concerns, you can escalate the matter to the Ministry of Human Resources and Emiratisation (MOHRE).

1. Steps to File a Complaint:

1. Contact MOHRE: Dial 800-60 or visit the nearest Tasheel center.
2. Submit Details: Provide all relevant documents, including your employment contract and evidence of the miscalculation.
3. Follow Up: MOHRE will mediate between you and your employer to resolve the dispute.

2. When to Approach the Labour Court:

If MOHRE mediation fails, you can escalate the matter to the Labour Court. Filing a case requires:

• A formal complaint from MOHRE.
• All supporting documents proving your claim.

How Employers Can Avoid Gratuity Errors?

Employers also have a responsibility to ensure accurate gratuity calculations. Here’s how they can prevent disputes:

1. Maintain Accurate Records: Keep detailed records of employees’ service duration and salary.
2. Automate Payroll Systems: Use software to calculate gratuity based on UAE Labour Law.
3. Conduct Regular Audits: Review gratuity provisions in financial statements to ensure compliance.
4. Provide Clear Communication: Inform employees of their entitlements and calculation methods in advance.

Frequently Asked Questions

Q. What if my employer refuses to pay gratuity?

File a complaint with MOHRE and escalate to the Labour Court if necessary.

Q. Can allowances be included in gratuity calculations?

No, gratuity is calculated based on basic salary, excluding allowances.

Q. How long does it take to resolve a gratuity dispute?

MOHRE aims to resolve disputes within a few weeks. Labour Court cases may take longer.

Q. Are part-time employees entitled to gratuity?

Part-time employees may qualify based on their contract and service duration.

Q. Can gratuity be reduced for resignation?

Yes, if you resign before five years of service, gratuity is prorated. Beyond five years, you receive full entitlement.