A practical guide to making the most of your UAE gratuity

For many people gratuity is the biggest single payment they will receive in the UAE, and it tends to arrive in the same fortnight as a visa deadline, a flat to hand back and a new job to find. Decisions made in that rush are rarely the best ones. A little planning before the money lands goes a long way.

Step one: make sure the amount is right

You cannot plan around a number you have not checked. Run your details through the gratuity calculator, then ask HR for a written breakdown of your whole final settlement. Sort out any difference while you are still an employee with access to payslips, email and the people who do payroll. It gets harder once your access is switched off.

Know when it should arrive

The law gives your employer 14 days from the end of your contract to pay your end of service dues. Until the money is actually in your account, do not commit it. Put off the flight booking that cannot be changed and the deposit that cannot be refunded.

Find out what your bank can take

If you have a personal loan, a car loan or a credit card with a UAE bank, read the agreement or call the bank before your last day. Many loan agreements give the bank rights over your end of service benefits, and banks can hold a final settlement that is paid into an account with an outstanding loan.

That is not always bad news, since clearing expensive debt is a good use of the money. The point is to know in advance. Ask for a settlement figure, ask whether early repayment carries a fee, and decide the order: the debt with the highest interest goes first.

Leaving the country with unpaid debts is a serious matter in the UAE and can follow you for years. If you cannot clear everything, talk to the bank and get a written repayment arrangement before you go.

Keep a buffer before anything else

If you are between jobs, work out what three to six months costs you: rent, school fees, food, transport and the cost of keeping your visa status in order. Set that aside first. Job searches in the UAE often take longer than people expect, and a buffer is what lets you turn down a bad offer.

If you are leaving the UAE

• Shop around for the transfer. On a large sum, the gap between a good exchange rate and a poor one is real money. Compare your bank with at least two exchange houses on the same day.
• Check the tax position at home. The UAE does not tax gratuity. Your home country may treat money you bring back differently depending on your residence status. A short conversation with a tax adviser there can save a nasty surprise.
• Close things properly. Cancel cards you no longer need, close or downgrade accounts and get clearance letters in writing. Unpaid annual fees have a way of growing while you are not looking.
• Collect your deposits. Your tenancy deposit and utility deposit are your money too. Start those refunds early, because they are slower than they should be.

If you are staying

When you move straight to a new employer, gratuity can feel like a bonus. It is better thought of as savings your old employer was holding for you. Three ideas that hold up well:

• Pay off what costs you interest.
• Top up your emergency fund to the level you would actually need.
• Put a fixed share away for the long term before you allow yourself to spend the rest.

Some employers now offer a government-backed savings scheme, under which end of service contributions are invested during your employment. If your next employer has joined it, ask how it works and what your options are.

Three ways gratuity disappears

• Signing before checking. Cancellation papers usually include a statement that you have received all your dues. Read the figures first and sign only when you are satisfied or the money has reached you.
• Lending it. Friends and relatives know when you have been paid. Decide your answer before you are asked.
• Paying someone to "release" it. Nobody needs a fee to make an employer pay gratuity. If your employer will not pay, a complaint to MOHRE is free.

Frequently asked questions