End-of-service gratuity and payroll for UAE clinic staff

UAE end-of-service gratuity, for private-sector employees under the federal labour law, is based on the last basic salary: 21 days' basic pay for each of the first five years of service and 30 days' basic pay for each year after that, with the total capped at two years' pay. Employees need at least one year of continuous service to qualify. Your clinic payroll software should calculate it and accrue for it every month.

This is general guidance, not legal advice. The rules below reflect Federal Decree-Law No. 33 of 2021 on the regulation of labour relations as we understand it. Free zones such as the DIFC and ADGM have their own schemes, UAE and GCC nationals are generally covered by pension schemes instead, and individual contracts can add to the statutory minimum. Check your position with the Ministry of Human Resources and Emiratisation (MOHRE) guidance or a labour lawyer.

The gratuity calculation, step by step

1. Confirm eligibility. The employee has completed at least one year of continuous service. Days of unpaid absence are not counted as service.
2. Take the last basic salary. Allowances such as housing and transport are not included.
3. Work out the daily wage. A common method is basic monthly salary divided by 30.
4. Accrue 21 days per year for the first five years. Part years are generally counted pro rata once the first full year is complete.
5. Accrue 30 days per year for service beyond five years.
6. Apply the cap. Total gratuity cannot exceed two years' pay.
7. Deduct amounts the employee legally owes, such as an outstanding loan, where the law and the contract allow.

The example is illustrative arithmetic, not a quote of anyone's entitlement. Under the 2021 law, most commentators agree the old reductions for resignation no longer apply to employees on the current contract types; if your clinic still uses older reduced-entitlement rules, have them reviewed.

Accrue monthly, not at exit

Gratuity is a liability that grows every month an employee stays. If you only book it when someone leaves, one senior resignation can wreck a month's results. The better practice is to accrue monthly:

• Calculate each employee's accrued gratuity at month end based on service to date and current basic salary.
• Post the movement to an end-of-service provision on the balance sheet, with the expense charged to the employee's branch or cost center.
• When an employee leaves, pay from the provision and post any difference.
• Review the provision when basic salaries change, because a raise increases the whole accrued balance, not just future months.

Charging the expense to the right branch matters for groups. A branch that looks profitable before gratuity may look very different after it. Our guide to multi-branch clinic accounting shows how to set that up.

Payroll for clinics: what makes it different

• Shifts and rotas. Nurses, receptionists and doctors often work rotas, nights and weekends, so overtime and compensation days need tracking.
• Variable pay. Doctors may earn commissions or a share of revenue, calculated from invoices.
• Allowances. Housing, transport and licence-related allowances sit outside basic salary, which changes gratuity.
• Loans and advances. Salary advances must be deducted consistently and cleared at settlement.
• Licences. A clinician whose licence has lapsed should not be rostered, which links payroll and rotas to credentialing.

Paying salaries through WPS

Private-sector employers in the UAE pay salaries through the Wage Protection System (WPS), using an approved bank or exchange agent. In practice your payroll produces a salary file per pay run, with each employee's identifiers, account details and net pay, which your bank or agent processes. Keep employee bank details, IBANs and IDs complete before payroll day; missing data is the usual reason a run is delayed.

Common gratuity mistakes

• Using total salary instead of basic. Gratuity is based on basic salary. Including allowances overstates the liability; the reverse mistake happens when basic salary is set unrealistically low in contracts.
• Using the salary at joining. The calculation uses the last basic salary, so every raise increases the accrued balance.
• Forgetting the cap. Long-serving staff reach the two-year cap; accruing beyond it overstates the provision.
• Counting unpaid leave as service. Days of unpaid absence do not count towards the service period.
• Applying old resignation rules. Reduced entitlements from the previous law should not be applied without legal review.
• Paying late. Final dues, including gratuity, must be paid within 14 days of the contract ending under the current law. Plan the cash in advance.

A monthly payroll checklist

1. Close attendance and approve overtime, leave and shift swaps.
2. Update new joiners, leavers, salary changes and allowances.
3. Calculate commissions and variable pay from the period's invoices.
4. Apply loan and advance deductions.
5. Run payroll as a draft and review the variance against last month.
6. Approve, then produce payslips and the salary transfer file for your bank or agent.
7. Post payroll and the gratuity accrual to the general ledger by branch and cost center.
8. For leavers, run the final settlement: salary due, unused leave, gratuity, minus any loan balance.

How Helix handles gratuity and payroll

Helix HR & Payroll covers employee records with document expiry, rotas and shift swaps, attendance (including biometric data via CSV import), leave, payroll with loans and advances, payslips and UAE end-of-service gratuity. Gratuity rules are configurable as service bands: new rules start from the UAE statutory tiers of 21 and 30 days per year, and you can adjust them if your contracts differ. A final settlement combines the final salary, unused leave and gratuity, minus any loan balance, and is saved as a draft for approval.

Payroll produces a WPS-ready salary transfer export for your bank or agent, and posts to the general ledger by branch and cost center. For groups, HR, payroll and finance run on one system across every site; see multi-branch groups. And because licences and rotas are linked, read our clinician credentialing guide next.