Overview of the JAFZA Gratuity System
JAFZA enforces its employment regulations under the Jebel Ali Free Zone Authority. The JAFZA Gratuity Calculator UAE calculates end-of-service pay based on these rules and operates separately from MOHRE, following the JAFZA Employment Handbook. The Handbook clearly defines eligibility, calculation, caps, and rules for partial service. Free zone employers use the JAFZA Gratuity Calculator UAE to compute gratuity solely according to these internal regulations. The structure resembles the MOHRE model, but the Free zone applies its own definitions of wage calculation, service continuity, and maximum entitlement limits.
Eligibility Conditions for Gratuity
JAFZA workers must meet certain specific conditions for gratuity:
- At least one year of continuous service
- Valid and active employment contract
- No termination for misconduct under JAFZA disciplinary rules
- Completion of the employment period defined in the contract
- Service only counts during lawful attendance and approved leave
Serious misconduct completely voids gratuity. JAFZA evaluates misconduct according to its own disciplinary framework, which differs from MOHRE standards.
JAFZA Gratuity Formula and Entitlement Structure
Gratuity entitlement depends entirely on the basic salary and total years of service inside the freezone. JAFZA applies the following calculation structure:
- First five years: 21 days of basic wage per year
- More than five years: 30 days of basic wage per year
- Maximum limit: Total gratuity cannot exceed the equivalent of two years’ wage
Basic salary is the exclusion factor for gratuity calculation. Housing allowance, transport allowance, overtime, bonuses, or any other extra compensation are not included in the formula. Additional service years are added according to a proportional monthly or daily breakdown.
Important Calculation Principles
JAFZA applies strict rules for consistency:
- Last drawn basic salary defines the calculation base
- Unpaid leave is deducted from total service duration
- Unauthorized absence extends the service period but does not count toward gratuity
- Fractional service months convert into days and add proportionally
- Wage used for calculation refers to the contractual basic wage, not gross income
These rules ensure that the gratuity value reflects actual eligible service without inflating the entitlement through allowances.
Example Gratuity Calculation (Correct JAFZA Method)
Country / Currency: UAE (AED)
Contract Type: Permanent
Joining Date: 01/01/2018
Leaving Date: 01/01/2024
Basic Salary: 4,000 AED
Allowances: 1,000 AED (not included in JAFZA gratuity)
Unpaid Leave Days: 12 days
Notice Pay Deduction: 0 AED
Apply JAFZA Gratuity Formula
First 5 years:
21 days per year
21-day salary = 133.33 × 21 = 2,799.93 AED
5-year subtotal = 2,799.93 × 5 = 13,999.65 AED
Year after 5:
30 days for each additional year
Additional service ≈ 1 year (after adjusting unpaid leave)
30-day salary = 133.33 × 30 = 3,999.9 AED
Total JAFZA Gratuity
Total = 13,999.65 + 3,999.9 = 17,999.55 AED
Final JAFZA Gratuity Payable: 17,999.55 AED
The example shows how JAFZA increases the entitlement after the fifth year and how the calculation excludes all non-basic pay components.
Final Notes on JAFZA Gratuity Rules
JAFZA uses a gratuity framework that resembles MOHRE in structure, but differs in authority and execution. Final calculations are made in accordance with the JAFZA Employment Handbook because Freezone operates under its own regulations. Contract terms, disciplinary records, and documented service periods play a major role in determining the final gratuity amount. The system provides clear guidelines so that employers can accurately calculate end-of-service benefits in accordance with Freezone regulations.