Gratuity on basic or gross salary
Should gratuity be on total salary or basic salary?
The situation
Gratuity is based on the last basic wage, not the full package with allowances.
The law
- Art 51, Federal Decree-Law 33 of 2021: End of service gratuity: 21 days basic wage a year for the first 5 years, 30 days after, capped at 2 years' wage
What it means for you
Example: total pay AED 15,000 with AED 9,000 basic and AED 6,000 allowances. Gratuity uses AED 9,000. Make sure the basic in the MOHRE contract matches payroll, since disputes go by the contract.
What to do
- Check the basic in the MOHRE contract.
- Use it for the gratuity calculation.
- Exclude allowances.
- Explain the basis on the settlement.
We can do this for youPayroll compliance: WPS salary runs, end of service gratuity, final settlement and payroll records: AED 95