i have a query regarding uae gratuity and annual leave carry forward rule in case of transfer within the group companies.
Eg: Employee gets transfer within the group -
1st company
tenure 3 yrs
basic salary -5000 pm
so gratuity as per uae law will be =10500(5000/30 days*21 days*3yrs)
2nd company
tenure 1 yr
Basic salary 7000pm
so gartuity will be = 4900 ( 7000/30 days*21 days*1 yr)
so how should the calculation be at the end of 4 yrs?
1) gratuity if calculated for 4yrs based on last drawn salary then the amount will be 19600 ( 7000/30*21*4 yrs)
OR
2)will it be with break down as per last salary drawn in the individual companies.ie- 10500+ 4900=15400 Aed?
Annul leave balance will be transferred from one company to another; but how will it be computed in case of final settlement-
Eg:
In the 1st company the Annual leave balance was 30days and was carried forward to new company.
in the 2nd company the employee accrues 30 more days; and the balance is 60 days cumulatively.
Now during final settlement how will it be calculated? is it based on last drawn salary? or split up?
From United Arab Emirates, Abu Dhabi
7Eg: Employee gets transfer within the group -
1st company
tenure 3 yrs
basic salary -5000 pm
so gratuity as per uae law will be =10500(5000/30 days*21 days*3yrs)
2nd company
tenure 1 yr
Basic salary 7000pm
so gartuity will be = 4900 ( 7000/30 days*21 days*1 yr)
so how should the calculation be at the end of 4 yrs?
1) gratuity if calculated for 4yrs based on last drawn salary then the amount will be 19600 ( 7000/30*21*4 yrs)
OR
2)will it be with break down as per last salary drawn in the individual companies.ie- 10500+ 4900=15400 Aed?
Annul leave balance will be transferred from one company to another; but how will it be computed in case of final settlement-
Eg:
In the 1st company the Annual leave balance was 30days and was carried forward to new company.
in the 2nd company the employee accrues 30 more days; and the balance is 60 days cumulatively.
Now during final settlement how will it be calculated? is it based on last drawn salary? or split up?
From United Arab Emirates, Abu Dhabi
Dear Gafoor,
gratuity is calculated as follows
Gratuity on Basic salary. Gratuity is 21 days as per the labor law.
If the staff has completed 1 year but less than 3 years, he will be eligible for 1/3rd of gratuity ie. 7 days of last drawn basic salary * no. of years completed
If the staff has completed 3 years but less than 5 years, he will be eligible for 2/3rd of gratuity i.e 14 days of last drawn basic salary * no. of years completed
If the staff has completed 5 years, he will be eligible for full gratuity 21 days of basic salary * 5 years
In your staff case,
Gratuity calculations are as follows
last drawn basic salary is 7000
completed years 4 years (less than 5 years), so eligible for 14 days basic as gratuity
Gratuity will be 13066 = (7000/30*14*4)
Accrued leave in the 1st company should have been paid while changing between the group. Since its not been paid earlier its based on the last drawn salary only in an understanding that he is working under the visa and labor card obtained through the first company.
Best Regards,
Guru
From United Arab Emirates, Dubai
gratuity is calculated as follows
Gratuity on Basic salary. Gratuity is 21 days as per the labor law.
If the staff has completed 1 year but less than 3 years, he will be eligible for 1/3rd of gratuity ie. 7 days of last drawn basic salary * no. of years completed
If the staff has completed 3 years but less than 5 years, he will be eligible for 2/3rd of gratuity i.e 14 days of last drawn basic salary * no. of years completed
If the staff has completed 5 years, he will be eligible for full gratuity 21 days of basic salary * 5 years
In your staff case,
Gratuity calculations are as follows
last drawn basic salary is 7000
completed years 4 years (less than 5 years), so eligible for 14 days basic as gratuity
Gratuity will be 13066 = (7000/30*14*4)
Accrued leave in the 1st company should have been paid while changing between the group. Since its not been paid earlier its based on the last drawn salary only in an understanding that he is working under the visa and labor card obtained through the first company.
Best Regards,
Guru
From United Arab Emirates, Dubai
Thanks for the reply;
But the calculation that you have provided is based on resignation, incase of transfer the amount accrued will be on 21 days not on the basis on 1/3rd or 2/3rd of gratuity accrued right?
Anyways; to be precise on the question earlier asked ; the question i wanted to focus was how will the company back charge to the old company.
After a bit of research and discussion with Sr HR people; the calculation on back charge to old companies will be as follows-
1st company will calculate gratuity accrual as per old salary that is = 5000/30*21*3=10500/-
2nd company will calculate the Gratuity =7000/30*21*1=4900/-
But since the service is continuous and employee has been in the continuous service with the group the gratuity will be calculated =7000/30*21*1=19600/-.
The 2nd company will bear the additional liability of the gratuity because there is increase in basic pay, and has to cover up the difference in cost-
hence the 2nd company will back charge 1st company 10500/- and bear the additional liability of 4200/- (19600-10500-4900=4200).
The amount payable to employee will be based on last drawn salary without loss to employee for serving continuous in the group =19600/-(10500+4200+4900).
Hope the answer is clear...
From United Arab Emirates, Abu Dhabi
But the calculation that you have provided is based on resignation, incase of transfer the amount accrued will be on 21 days not on the basis on 1/3rd or 2/3rd of gratuity accrued right?
Anyways; to be precise on the question earlier asked ; the question i wanted to focus was how will the company back charge to the old company.
After a bit of research and discussion with Sr HR people; the calculation on back charge to old companies will be as follows-
1st company will calculate gratuity accrual as per old salary that is = 5000/30*21*3=10500/-
2nd company will calculate the Gratuity =7000/30*21*1=4900/-
But since the service is continuous and employee has been in the continuous service with the group the gratuity will be calculated =7000/30*21*1=19600/-.
The 2nd company will bear the additional liability of the gratuity because there is increase in basic pay, and has to cover up the difference in cost-
hence the 2nd company will back charge 1st company 10500/- and bear the additional liability of 4200/- (19600-10500-4900=4200).
The amount payable to employee will be based on last drawn salary without loss to employee for serving continuous in the group =19600/-(10500+4200+4900).
Hope the answer is clear...
From United Arab Emirates, Abu Dhabi
Thank you sulthan;
i would like to correct you on the gratuity calculation details as mentioned by you-
"4 year to lesser than 5 year - 21 days salary /year "- this is incorrect.
The UAE Law has only 3 tire -
1-3 yrs 7 days(1/3rd of 21 days basic salary)
3-5yrs 14 days(2/3rd of 21 days basic salary)
5yrs and above full gratuity on 30 days basic salary for every additional completed yr of service.
There is also a upper ceiling to gratuity pay out ; that is the total gratuity should not exceed 2 yrs pay.
From United Arab Emirates, Abu Dhabi
i would like to correct you on the gratuity calculation details as mentioned by you-
"4 year to lesser than 5 year - 21 days salary /year "- this is incorrect.
The UAE Law has only 3 tire -
1-3 yrs 7 days(1/3rd of 21 days basic salary)
3-5yrs 14 days(2/3rd of 21 days basic salary)
5yrs and above full gratuity on 30 days basic salary for every additional completed yr of service.
There is also a upper ceiling to gratuity pay out ; that is the total gratuity should not exceed 2 yrs pay.
From United Arab Emirates, Abu Dhabi
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