Gratuity Calculation for UAE
Employee's working in UAE are entitled to an additional payment upon termination which is called Gratuity. The entitlement to this payment is accured during the work relationship.
- You can define your own formula and create a setup according to the values to be returned to your formula run results. In such a scenario, you may not need to use the localization solution for gratuity processing.
- You can define your own reference formula for gratuity processing, which substitutes the gratuity formula defined at the legislative level. If a user-defined formula exists, then the seeded formula executes it.
- The duration of service and the contract type (fixed or unlimited) determines
the number of days of gratuity payment to which thepayee is entitled per year of
service. These days are retrieved from thelegislative repository for calculation
information.
The duration of service can be reduced by unpaid or unauthorized absences. This is obtained by creating elementsfor Unpaid Leave classification and attaching this element to the absence type. If an absence with this newly created absence type is recorded, the Unpaid Leave element’s days input value will feed the Leave Without Pay balance. In the Gratuity formula, the Leave Without pay balance is used to get the unpaid absences.
- The base salary for gratuity payment is calculated through the salary formula selected at the legal employer level.
- If the person is terminated, contract type and termination initiator is checked
and amount is paid:
- If termination is initiated by the employer and the employee has completed more than one year in service, then the complete gratuity accrued is paid to the employee.
- If termination is initiated by the employee, the application fetches the payment factor using the contract type and period of service.