How is Indemnity Calculated in UAE?

If you are working in the United Arab Emirates (UAE) and are planning to leave your job, it is essential to understand how indemnity is calculated. Indemnity, also known as end of service gratuity, is a benefit provided to employees when they leave a job. This comprehensive guide will provide you with all the information you need to know about how indemnity is calculated in UAE.

What is Indemnity?

Indemnity, or end of service gratuity, is a sum of money that is paid to employees as a reward for their service. It is calculated based on the length of service and the employee's salary. The purpose of indemnity is to provide financial security to employees when they leave a job and to recognize their contribution to the company.

Who is Eligible for Indemnity?

All employees who have completed at least one year of continuous service with a company are eligible for indemnity. This includes both limited and unlimited contract employees. However, there are certain conditions that must be met in order to be eligible for indemnity:

• The employee must have completed at least one year of continuous service
• The employee must have resigned or been terminated for reasons other than misconduct
• The employee must have a valid employment contract

Factors to Consider for Indemnity Calculation

Several factors are taken into account when calculating indemnity in UAE. These factors include:

• Length of Service: The number of years and months the employee has worked for the company
• Basic Salary: The employee's basic salary at the time of leaving the job
• Type of Contract: Whether the employee is on a limited or unlimited contract
• Reason for Leaving: Whether the employee resigned or was terminated

Calculating Indemnity for Limited Contracts

For employees on limited contracts, the calculation of indemnity is as follows:

1. For the first five years of service, the employee is entitled to 21 days of basic salary for each year
2. After five years of service, the employee is entitled to 30 days of basic salary for each year
3. The total amount is then multiplied by the number of years of service

Calculating Indemnity for Unlimited Contracts

For employees on unlimited contracts, the calculation of indemnity is as follows:

1. The employee is entitled to 21 days of basic salary for each year of service
2. The total amount is then multiplied by the number of years of service

FAQs

Here are some frequently asked questions about indemnity calculation in UAE:

• How is indemnity calculated in UAE? Indemnity is calculated based on the length of service and the employee's salary.
• Is indemnity in UAE calculated on the basic salary? Yes, indemnity is calculated based on the employee's basic salary at the time of leaving the job.
• What is the new indemnity law in UAE 2023? The new indemnity law in UAE for 2023 has not been announced yet. It is important to stay updated with the latest regulations.
• Is indemnity added to the monthly salary? No, indemnity is not added to the monthly salary. It is paid as a lump sum when the employee leaves the job.
• When should anyone not be paid indemnity? Indemnity may not be paid if the employee has been terminated due to misconduct or if the employee does not have a valid employment contract.

Conclusion

Calculating indemnity in UAE is an important process that employees need to understand when planning to leave a job. By considering factors such as length of service, basic salary, and type of contract, employees can ensure that they receive the correct amount of indemnity. It is also important to stay updated with the latest regulations and laws regarding indemnity in UAE.