What can an employer deduct from end-of-service gratuity in the UAE?
Only amounts due by law or court ruling. Article 29 of Cabinet Resolution No. 1 of 2022 lists loan repayments and overpayments, pension and insurance contributions, fines under an approved penalty regulation, court-ordered debts, and damage caused by the worker's fault or breach of instructions. Fines and damage need the legal procedure and a claim within three months.
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The three-month condition
For fines and damage, the employer must have followed the procedures in the law and regulation, and no more than three months may have passed since the amount fell due, unless agreed otherwise. Old grievances cannot be swept into the final settlement.
What cannot be deducted
Recruitment costs, which Article 6 of the labour law forbids charging to the worker, and any amount without a legal basis, such as an unrecorded estimate of lost productivity.
How SupaJack Construct settles it
Outstanding salary advances are recovered from a dated instalment schedule, and the final settlement shows gratuity, leave, notice and deductions as separate lines in one journal entry.
Related tools and guides
See the UAE labour law guide for contractors, the final settlement calculator, the gratuity calculator, the annual leave calculator, the unpaid leave deduction calculator, payroll and WPS in SupaJack Construct, time and attendance and the meaning of basic salary.
Worked example
A foreman's gratuity is AED 18,000. He has an outstanding advance of AED 3,000 and a fine of AED 200 imposed two months earlier under the approved penalty regulation. Both can be deducted, leaving AED 14,800. A damage claim from eight months earlier could not be deducted without his agreement.
Questions people ask
Can recruitment costs be deducted?
No. Article 6 forbids charging them to the worker.
How old can a fine be?
No more than three months from the due date, unless agreed.
Can a loan be deducted?
Yes, as an amount owed.