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How does SupaJack Construct calculate end-of-service gratuity?

Last updated

On the last basic salary, as Article 51 sets: 21 days a year for the first five years and 30 for each year after, pro rata for part years once a year is complete, capped at 24 months of basic salary. The final settlement adds leave, notice and unpaid salary and posts it as one journal entry.

On this page
  1. Unpaid days
  2. Monthly accrual
  3. Same formula as the calculator
  4. Related tools and guides
  5. Questions people ask

Unpaid days

Article 51 excludes unpaid days of absence from service. Before calculating gratuity, the system subtracts the employee's approved leave of any type marked unpaid from the service period, counting a half day as 0.5. It does this in the final settlement, the monthly end-of-service provision and the gratuity simulator. The free gratuity calculator on this site has a field for unpaid days.

Monthly accrual

Gratuity is also accrued monthly and reconciled, so the liability in the balance sheet tracks what would be due if every employee left today.

Same formula as the calculator

The gratuity calculator on this site uses the same formula as the system. A test runs both on the same inputs and checks that the results match to the fils.

Related tools and guides

See payroll and WPS, time and attendance, interim payments, finance and VAT, approvals, the construction ERP overview, the buyer's guide and the answer on scheduling, BIM and safety.

Worked example

An electrician with a basic salary of AED 4,500 leaves after 6 years and 3 months. The system pays 105 days for the first five years and 37.5 days for the remaining 1.25 years, 142.5 days at AED 150 a day, AED 21,375, well under the AED 108,000 cap.

Questions people ask

Is gratuity on basic or total salary?

Basic, as Article 51 sets.

Is the two-year cap applied?

Yes, 24 months of basic salary.

Are unpaid days removed automatically?

Yes, approved leave of an unpaid type is removed from service, with half days as 0.5.

Sources

  1. Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationship (MOHRE, consolidated)
  2. End of service benefits for workers in the private sector (u.ae)

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