End of service gratuity is easy to ignore until someone leaves. Then a restaurant that never set money aside finds a large payment due in one month, for years of service it never showed in its accounts. Accruing the gratuity a little every month spreads that cost over the time the person actually works, so your profit and loss tells the truth and the amount owed is always visible.
Wink You can do that on every payroll run. This guide explains the rule it uses, what you need to enter, and where its scope ends. It is general information about the software, not legal advice; check your own cases with a labour law adviser.
The rule behind the calculation
The only gratuity preset today is the UAE private sector preset, based on Article 51 of UAE Federal Decree Law 33 of 2021. It works on basic pay:
- Nothing is due before one full year of service.
- 21 days of basic pay for each of the first five years.
- 30 days of basic pay for each year after the fifth.
- Part years count in proportion once the first year is complete.
- A day of pay is the monthly basic divided by 30, and the total is capped at two years of basic pay.
Each month, Wink You works out what the person would be owed at the end of the month, takes away what was owed at the end of the previous month, and books the difference. In practice this means nothing is booked during the first year, and in the month a person completes their first year, the whole first year is booked at once.
A worked example
Take a chef with a monthly basic of 6,000 in your currency. A day of pay is 6,000 divided by 30, so 200. After three full years the amount owed is 3 times 21 days, which is 63 days, or 12,600. After seven years it is 5 times 21 days plus 2 times 30 days, which is 165 days, or 33,000. The cap for this chef is two years of basic pay, 144,000. From the first anniversary to the fifth, each month adds about 21 divided by 12 days, roughly 350 a month, and after the fifth about 30 divided by 12 days, roughly 500 a month. That is the figure you see on each payroll run.
How to turn it on, step by step
1. Choose the preset
Open Wink Accounting, then Payroll settings. Under Gratuity preset choose UAE private sector preset and save. It is never switched on for you based on your currency or location; you choose it.
2. Complete each employee's record
In Staff, More actions, Employment and pay, make sure every person has a hire date and a pay rate. For someone paid per hour, also fill in their contracted weekly hours: the monthly basic is then worked out as the hourly rate times the weekly hours times 52, divided by 12. If a contract end date is set, service stops there. Without these details the payroll run will not prepare and tells you which one is missing.
3. Run payroll as normal
Prepare the payroll run. Each employee line shows a Gratuity accrual column next to basic, overtime and net pay. When you click Approve and post, the accrual is booked to two accounts: End of service cost as the expense and End of service benefits owed as the liability. For someone who works across branches, the accrual sits on their home branch.
What it does not cover
- It is an accrual in your books, not a final settlement. It does not produce an end of service payment or a leaving statement.
- Service is counted from the hire date to the end of the month. Unpaid leave and absence days are not taken off it.
- It uses the basic pay rate only. Allowances added on a payroll run are not part of it.
- When you start using it for someone who already has years of service, only the change from that month is booked. What built up before belongs in your opening balances; agree that figure with your accountant.
- There is only a UAE private sector preset. No other country or regime is available yet.
Frequently asked questions
How is end of service gratuity calculated in the UAE?
Under the rule Wink You uses, it is 21 days of basic pay per year for the first five years and 30 days per year after that, after at least one year of service, capped at two years of basic pay. A day of pay is the monthly basic divided by 30.
Why is the gratuity accrual zero for a new employee?
Because nothing is due before the first full year. In the month the person completes one year, the first year is booked in one go, and after that it builds up every month.
Where do I see how much gratuity I owe?
The balance of the End of service benefits owed account in your books shows the total, and each payroll run shows the accrual per employee for that month.
Can I change the gratuity rule or switch it off?
You can choose the UAE private sector preset or no preset at all in Payroll settings. The numbers inside the preset are fixed to the law it follows, so you cannot edit the days or the cap yourself. Each payroll run keeps the preset that was set when it was prepared.
Does it work for hourly staff?
Yes, as long as their contracted weekly hours are filled in, so a monthly basic can be worked out from the hourly rate.
Learn more
See winkyou.com/products/accounting-reports for the books, and winkyou.com/support/finance-and-reports/how-to-prepare-a-payroll-run and winkyou.com/support/staff-and-shifts/how-to-set-pay-rates for the payroll steps the accrual depends on.