Zakat on End-of-Service Gratuity Calculator, UAE

1. 1No zakat is due before the award is received; the clock starts on the day it lands
2. 2Net zakatable wealth = the award received + the rest of your zakatable wealth − debts you owe
3. 3Nisab = 85 grams × the price of a gram of gold
4. 4Zakat = net × 2.5% on a lunar year, or × 2.577% on a solar one

Symbols

the start date

The day the award is received, not the day it fell due or the day service ended

the practical route

Fold what is left of it into your zakatable wealth and pay on it at your usual zakat date

what was spent

Zakat is on what remains at the end of the year, so anything spent during it carries none

What is due on an award held for a full year?

An employee receives an end-of-service gratuity of 60,000 AED and keeps all of it in their account until a full lunar year has passed, with no debts due, and the gold price is 509 AED per gram.

1. Nisab: 85 × 509 = 43,265 AED
2. Net zakatable wealth: 60,000 − 0 = 60,000 AED, which is above the nisab
3. Zakat: 60,000 × 2.5% = 1,500 AED

Zakat due is 1,500 AED. Had the employee added the gratuity to other wealth paid on at a fixed date, the same 2.5% would be paid on it together with that wealth on its date, even before a full year had passed over the gratuity.

When does an award enter zakat?

An end-of-service gratuity becomes your money when you receive it, so the rules of zakat on wealth apply: 2.5% once it reaches the nisab and a full year has passed. The nisab is the value of 85 g of gold, about 43,265 AED at 509 AED per gram, a reference price you can change. Before receipt no zakat is due according to most scholars, because the money is not yet settled in your ownership.

After receipt there are two well-known approaches. The first, the majority scholarly view, is that a new zakat year starts for the gratuity on the date you receive it, and you pay 2.5% of whatever remains once a lunar year has passed. The second, a practical approach many people follow, is to add the gratuity to your existing zakatable wealth and pay on it at your usual zakat date even if a full year has not passed over it. The calculator presents both without ruling between them; choose the one you are comfortable with or that a scholar has advised.

Under either approach the net figure is worked out after deducting debts you owe within the year, and if what remains of the gratuity is below the nisab on its own it may still reach it once added to your cash, gold and investments. If you count your year on the solar calendar the rate is 2.577%. The amount of the gratuity itself is calculated under Article 51 of Federal Decree-Law No. 33 of 2021: 21 days' basic wage for each of the first five years and 30 days' wage for each year after that; use our end-of-service calculator to work it out.

• No zakat on the gratuity before you receive it, according to most scholars; the count starts on the date of receipt
• Majority view: 2.5% of what remains of the gratuity once a lunar year has passed from receipt
• Practical approach: add it to your zakatable wealth and pay on it at your usual zakat date
• Nisab = 85 g × the gold price per gram (43,265 AED at 509 AED per gram), and debts due within the year are deducted