1. Administering Payroll for the United Arab Emirates
  2. Monthly Gratuity Accrual for UAE

Monthly Gratuity Accrual for UAE

The application calculates the accrual of gratuity on a monthly basis. The amount calculated is the amount that an employee would be entitled to, if they were terminated at the end of that month and if they were eligible for payment.

The monthly gratuity accrual calculation is processed through the Employee Gratuity Accrual Initiator element. The application keeps a record of the total accrued amount and the incremented accrued amount (periodic difference).
Note: Manually attach the Employee Gratuity Accrual Initiator element to employees for whom a monthly gratuity accrual is required.
The monthly gratuity accrual considers the following details to calculate the gratuity:
  • Date of termination: The current pay period end date is taken as the date of termination.
  • Length of service: All types of paid leave are considered to calculate the length of service. Unpaid leave is not included.
  • Base Salary: The base salary for gratuity payment is calculated through the salary formula selected at the legal employer level.
  • Termination Initiator: The calculation assumes the employer as the termination initiator. And the employee is entitled to the full amount.
  • Probation: If the employee is on probation, the accrual amount is zero.
  • Contract type: The entitlement is based on Contract type and is captured on Person Management.
  • Entitlement:
    • Fixed Contract: An employee is entitled to 21 days salary for the first 5 years and 30 days salary for each additional year.
    • Unlimited Contract: An employee is entitled to 21 days salary for the first 5 years and 30 days salary for each additional year.
  • Maximum Limit: The total amount accrued must not be greater than twice the monthly salary.
  • Monthly gratuity accrual calculations will be performed only for current employees when the Registered for Social Insurance check box isn't selected on the Employee Social Insurance Details card. If the employee is due to be terminated during the pay period, full gratuity will be calculated instead of the monthly accrual.