Many employees in the UAE work under unlimited contracts, which give more flexibility but have different gratuity rules compared to limited contracts. Knowing how your end-of-service benefits are calculated under an unlimited contract helps you plan your future and ensures you get what you deserve.
What is an Unlimited Contract?
An unlimited contract does not have a fixed end date. You or your employer can end the contract anytime by giving proper notice (usually 30 days to 3 months). This type of contract is common for jobs with no fixed term.
Learn more about limited vs unlimited contracts.
When Are You Eligible for Gratuity in Unlimited Contracts?
You are eligible for gratuity if https://gratuitycalculatorsuae.com/:
- You are an expatriate employee.
- You complete at least one year of continuous service.
- You resign or are terminated following legal rules.
If you work less than one year, gratuity is not paid.
How Is Gratuity Calculated for Unlimited Contracts?
The UAE Labour Law sets different rules based on how long you worked:
- 1 to 3 years: You get one-third of 21 days’ basic salary per year.
- 3 to 5 years: You get two-thirds of 21 days’ basic salary per year.
- More than 5 years: You get a full 21 days’ salary per year for the first 5 years, and 30 days’ salary for each additional year.
Try this simple UAE gratuity calculator to estimate your payout.
What Happens If You Resign Early?
Resigning before completing one year means no gratuity. If you resign after one year, your gratuity reduces according to the years worked, as described above. Always check your contract and give proper notice to avoid losing benefits.
What If You Are Terminated?
Termination by the employer usually means you get full gratuity according to your service length, unless dismissed for misconduct.
Details are available in the termination gratuity guide.
Real Example of Gratuity Calculation
If your basic salary is AED 12,000 and you worked 4 years under an unlimited contract:
- Years 1 to 3: 1/3 of 21 days × 3 years
- Year 4: 2/3 of 21 days × 1 year
Calculation:
(12,000 × 21 × 3 × 1/3) ÷ 30 + (12,000 × 21 × 2/3) ÷ 30 = AED 8,400 + AED 5,600 = AED 14,000
Use our online gratuity formula tool for quick results.
Tips to Protect Your Gratuity
- Always give proper notice when resigning.
- Keep your contracts and pay slips safe.
- Discuss any issues with your HR department.
- Contact MOHRE if there is a dispute.
- Consult a labour law expert for guidance.
Learn more about your rights in this gratuity rights guide.
Conclusion
Unlimited contracts offer more flexibility but come with specific gratuity rules. Knowing these rules helps you claim your rightful end-of-service benefits. Use the Gratuity Calculator UAE to get an instant estimate of your payout and plan your finances wisely.