Different regions have different gratuity calculation methods

Enter last drawn basic salary only (exclude allowances)

Total completed years of service (decimals allowed)

Enter monthly Dearness Allowance (optional)

Results:

UAE Gratuity Formula

Calculate end-of-service gratuity in UAE:

Example: Salary AED 15,000, Service 6 years
Daily wage = 15,000 ÷ 30 = AED 500
First 5 years: 500 × 21 × 5 = AED 52,500
6th year: 500 × 30 × 1 = AED 15,000
Total = AED 67,500

India Gratuity Formula (Covered Under Act)

For organizations covered under Payment of Gratuity Act 1972:

Where: 15 = 15 days' salary for each year, 26 = working days per month (excluding weekly offs)

Example: Basic ₹50,000, DA ₹10,000, Service 10 years
Gratuity = (50,000 + 10,000) × 10 × 15 ÷ 26 = ₹3,46,154

India Gratuity Formula (Non-Covered)

For organizations NOT covered under the Act:

Example: Basic ₹40,000, Service 6 years
Gratuity = 40,000 × 6 × 15 ÷ 30 = ₹1,20,000

UAE Resignation Gratuity (Reduced)

For employees resigning before 5 years:

Example 1: UAE - 5 Years of Service

Scenario: Employee worked 5 years with basic salary AED 12,000

Step 1 - Calculate Daily Wage:

Daily Wage = 12,000 ÷ 30 = AED 400

Step 2 - Calculate Gratuity:

Gratuity = 400 × 21 × 5 = AED 42,000

Total Gratuity = AED 42,000

Example 2: UAE - 8 Years of Service

Scenario: Employee worked 8 years with basic salary AED 18,000

Calculation:

Daily Wage = 18,000 ÷ 30 = AED 600

First 5 years: 600 × 21 × 5 = AED 63,000

Next 3 years: 600 × 30 × 3 = AED 54,000

Total Gratuity = AED 117,000

Example 3: India - 10 Years Service (Covered)

Scenario: Basic ₹60,000, DA ₹15,000, 10 years service

Calculation:

Gratuity = (60,000 + 15,000) × 10 × 15 ÷ 26

= 75,000 × 10 × 15 ÷ 26

= 11,250,000 ÷ 26

Gratuity = ₹4,32,692

Example 4: UAE Resignation After 2 Years

Scenario: Resignation after 2 years, basic salary AED 10,000

Calculation (1/3 Gratuity):

Daily Wage = 10,000 ÷ 30 = AED 333.33

Eligible Days = 7 days per year (1/3 of 21)

Gratuity = 333.33 × 7 × 2 = AED 4,667

Total Gratuity = AED 4,667

UAE Gratuity Eligibility

Minimum Service: 1 year of continuous service required.

Based On: Last drawn basic salary only (excludes allowances).

Maximum Cap: Gratuity cannot exceed 2 years' basic salary.

Payment Timeline: Within 14 days of employment termination.

India Gratuity Eligibility

Minimum Service: 5 years of continuous service (exceptions for death/disability).

Based On: Basic salary + Dearness Allowance (DA).

Maximum Limit: ₹20 lakhs (tax-exempt under Income Tax Act).

Rounding: Service > 6 months rounded to full year.

When Gratuity is Payable

✓ Retirement: Upon reaching retirement age.

✓ Resignation: After completing minimum service period.

✓ Termination: By employer (reduced in UAE if before 5 years).

✓ Death/Disability: To nominee/employee even if minimum period not completed.

What is gratuity?

Gratuity is a lump sum payment made by an employer to an employee as a token of appreciation for services rendered. It's a statutory benefit paid upon resignation, retirement, or termination after completing minimum service period (typically 5 years in India, 1 year in UAE).

How is gratuity calculated in UAE?

In UAE, gratuity = (Basic Salary ÷ 30) × Eligible Days × Years of Service. For 1-5 years: 21 days per year. For 5+ years: 21 days for first 5 years + 30 days for each additional year. Maximum capped at 2 years' salary.

How is gratuity calculated in India?

Under Payment of Gratuity Act 1972: Gratuity = (Basic Salary + DA) × 15 × Years of Service ÷ 26. For non-covered employees: Gratuity = (Basic Salary + DA) × 15 × Years of Service ÷ 30. Eligible after 5 years of continuous service.

Is gratuity calculated on basic salary or gross salary?

Gratuity is calculated only on basic salary (plus Dearness Allowance in India). Other components like HRA, transport allowance, bonuses, and overtime are NOT included in gratuity calculations.

What is the minimum service period for gratuity?

In India: 5 years of continuous service (waived in case of death or disability). In UAE: 1 year of continuous service. Part-time service of 6 months or more is rounded to full year.

Is gratuity taxable?

In India: Gratuity up to ₹20 lakhs is tax-exempt for government and private employees covered under the Act. Excess amount is taxable. In UAE: Gratuity is tax-free as UAE has no income tax.

When is gratuity paid?

Gratuity must be paid within 30 days in India and 14 days in UAE from the date of employment termination. Delays can result in penalties for employers.

Can gratuity be forfeited?

Yes, gratuity can be forfeited wholly or partially if the employee's services are terminated due to willful omission, negligence causing damage, or acts of violence, moral turpitude, or gross misconduct.