End-of-service gratuity is a key employee benefit in the UAE. It provides a lump sum payment to workers upon termination of their contract.
Gratuity calculation in free zone UAE generally follows the same rules as the mainland, but some have unique schemes.
This article explains key points of gratuity calculation in free zones and how our law firm can assist in ensuring compliance in 2025.
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Gratuity Calculation in Free Zone UAE
Most UAE free zones calculate gratuity according to Federal Decree-Law No. 33 of 2021. Employees who complete at least one year of continuous service qualify for gratuity.
The calculation follows this formula:
- First 5 years of service: 21 days’ basic wage per year.
- Beyond 5 years: 30 days’ basic wage per year.
- Total gratuity is capped at two years’ salary.
- Basic wage only: Allowances (housing, transport, etc.) are excluded.
Some free zones have different schemes:
- The Dubai International Financial Centre (DIFC) has replaced traditional gratuity with the DIFC Employee Workplace Savings (DEWS) plan. Employers now contribute monthly to a managed savings fund, at a rate of 5.83% of basic salary for employees with less than five years of service, and 8.33% for those with five or more years.
- ADGM (Abu Dhabi Global Market): ADGM follows the standard gratuity formula but allows an optional pension savings scheme as an alternative.
- JAFZA, DMCC, and other free zones: These zones follow UAE labour law, applying the 21/30-day gratuity calculation method.
Employers must settle gratuity within 14 days of the employee’s final working day. Failure to comply can result in penalties.
Legal Services for Gratuity Calculations in UAE Free Zones
Our law firm in UAE specializes in gratuity compliance and disputes within UAE free zones. We offer:
- Legal advisory on gratuity laws: Ensuring companies follow the latest UAE labour regulations.
- Employment contract review: Structuring contracts to align with free zone requirements.
- Dispute resolution: Representing employees or employers in gratuity disputes.
- DIFC and ADGM compliance: Advising on DEWS contributions and alternative savings plans.
- Company policy drafting: Developing internal policies for accurate gratuity calculations.
- MOHRE and free zone authority representation: Handling official grievances and claims.
FAQs about Gratuity in UAE Free Zones
Conclusion.
Gratuity calculation in free zone UAE varies depending on the jurisdiction. Most follow UAE labour law, while financial free zones like DIFC and ADGM have alternative schemes.
Employers must stay compliant to avoid legal risks. Our law firm provides expert legal guidance to ensure businesses and employees navigate gratuity laws correctly.
Contact our law firm in UAE for expert help. Click the Whatsapp icon below.
A law graduate and legal writer focusing on UAE law, he became known for his ability to clarify complex legal concepts through his writings. His work simplifies the intricacies of the legal landscape in the Emirates, helping both locals and expatriates navigate their legal concerns.
