Aqid ERPThe formula
- 21 days' basic wage for each of the first five years of service.
- 30 days' basic wage for each year after the fifth.
- Parts of a year count in proportion.
- The total may not exceed two years' wage.
- Nothing is due before one year of continuous service.
A worked example
Seven years of service and a last basic monthly wage of AED 12,000. A day's basic wage is the monthly wage × 12 ÷ 365:
| Daily basic wage: 12,000 × 12 ÷ 365 | AED 394.52 |
|---|---|
| First 5 years: 5 × 21 days | AED 41,424.66 |
| Next 2 years: 2 × 30 days | AED 23,671.23 |
| Gratuity (under the cap of AED 288,000) | AED 65,095.89 |
Basic wage only
The gratuity uses the basic wage, without housing, transport or other allowances. A contract that sets a low basic and high allowances therefore lowers the gratuity; read the contract's split before the final settlement.
Resignation
The 2021 law no longer cuts the gratuity when the employee resigns, as the old law did: a worker with a year or more of service receives the full amount whether they resign or the employer ends the contract. Deductions are only for amounts the worker owes the employer.
How Aqid ERP helps
Aqid ERP's payroll accrues the gratuity every month, applies the one-year minimum and the two-year cap at settlement, and runs salaries through the WPS file, so the liability on the balance sheet is what you would pay if everyone left today.