What Happens to Your Gratuity If You Resign in the UAE?

Many employees working in the UAE often feel uncertain about what happens to their gratuity if they decide to resign. Whether you are changing jobs, planning to return to your home country, or simply moving on to a new opportunity, understanding your end-of-service benefits is essential.

Gratuity in the UAE is regulated under labour law and is calculated based on factors such as years of service, basic salary, and the type of employment contract. To avoid confusion and rough estimates, employees usually check their expected payout using a UAE Gratuity Calculator before submitting their resignation.

Benefits of Using an Online Gratuity Calculator

Using an online gratuity calculator helps employees understand their expected end-of-service benefits without dealing with complex formulas.

Key benefits include:

• Quick and accurate estimation based on basic salary, contract type, and years of service
• Clear understanding of gratuity eligibility before resignation
• Time-saving alternative to manual calculations and guesswork

 

Who Is Eligible for Gratuity After Resignation?

To qualify for gratuity, an employee must complete at least one year of continuous service with the same employer. If an employee resigns before completing one year, gratuity is generally not payable.

Once the one-year requirement is fulfilled, gratuity becomes applicable, although the final amount depends on other factors such as contract type and total service duration.

Does Contract Type Matter?

Yes, the type of contract plays a major role in gratuity entitlement.

Limited Contracts

Under the updated UAE labour laws, the limited contract is now the standard form of employment contract across the UAE. Employees who complete their full contract term are usually entitled to gratuity. However, if an employee resigns before completing the contract period, gratuity may be reduced or denied depending on the reason for resignation and contractual terms.

Unlimited Contracts

Employees who resign after completing at least one year of service are generally eligible for gratuity. The amount is calculated based on basic salary and total years worked.

Employees should always review their employment contract to understand how resignation may affect their final settlement.

How Years of Service Affect Gratuity

The length of service directly impacts gratuity calculation:

From 1 to 5 Years of Service

Gratuity is calculated as 21 days of basic salary for each completed year.

More Than 5 Years of Service

Gratuity is calculated as 30 days of basic salary for each additional year beyond five years.

The total gratuity amount cannot exceed the equivalent of two years’ basic salary, regardless of how long the employee has worked.

Simple Gratuity Calculation Example

Let’s understand this with a basic example.

Assume an employee has:

• Basic monthly salary: AED 3,000
• Total service: 3 years
• Contract type: Limited

Step 1: Calculate daily basic salary
AED 3,000 ÷ 30 = AED 100 per day

Step 2: Gratuity for one year
21 days × AED 100 = AED 2,100

Step 3: Total gratuity for 3 years
AED 2,100 × 3 = AED 6,300

This is a simplified example. Actual gratuity may vary depending on contract terms, partial years, or salary changes.

Resignation vs Termination

Gratuity rules may differ if an employee is terminated due to serious misconduct or legal violations. In such cases, gratuity may be reduced or completely forfeited.

Employees should always follow proper resignation procedures and comply with UAE labour laws to avoid issues during final settlement.

How to Estimate Gratuity Easily

Manual calculations can sometimes be confusing, especially when dealing with partial years, contract conditions, or salary increments. Online gratuity calculators help employees estimate their benefits quickly and reduce the risk of calculation errors.

Final Thoughts

Resigning from a job in the UAE does not automatically mean losing your gratuity. As long as you meet the eligibility requirements and follow proper procedures, you are likely entitled to receive an end-of-service benefit.

Understanding gratuity rules allows employees to plan better, avoid disputes, and ensure they receive what they are legally owed.

Frequently Asked Questions

Will I get paid for my annual leave if I resign?
Yes, any unavailed annual leave balance is paid out when employment ends.

Is gratuity compulsory in the UAE?
Yes, gratuity is mandatory under UAE labour law for eligible employees.

Can an employer delay gratuity payment?
Gratuity should be paid within 14 days after the employee’s service ends.