End of service gratuity and the cost of an in-house PPC hire in the UAE

A business weighing an in-house paid ads hire against an agency usually starts by comparing a salary with a monthly fee. That comparison leaves something out on the employee side, because an employer pays costs that are not part of the salary. One of them is end of service gratuity, so it is worth understanding before you decide.

What the UAE Government portal says

The portal's page on end of service benefits for workers in the private sector says full-time workers who have spent one year or more in continuous service are entitled to gratuity, and that a worker with less than a year is not. For service of more than one year and less than five, it describes 21 days' salary for each year of work. For service after the first five years, it describes 30 days' salary for each year. It says the total gratuity shall not exceed the wage of two years, and that it is calculated on the basic salary, so allowances such as housing and transport are excluded. It also says employers must pay all outstanding wages, other entitlements and gratuity within 14 days of the contract ending.

The same page refers to a savings scheme that applies to private sector employers and employees and to free zones. So the standard rule may not be the one that applies to your business, which is why I would not rely on a general summary, including this one.

Why it matters for the comparison

Gratuity builds up while the person works for you, even though you pay it at the end. If you only compare the monthly salary with an agency's monthly fee, the hire looks cheaper than it is, and the gratuity arrives later as a surprise. There may be other employer costs too, such as visa, medical insurance, leave and cover, which you should ask your accountant about. I list them in the full cost of an in-house paid ads hire, without amounts, because the amounts depend on your licence, your emirate and the person.

What I would do

I would ask my accountant or lawyer which gratuity rule applies to my business, and ask them to put it as a monthly figure to set aside. Then I would enter that figure in the monthly other costs box for the in-house option in the hiring cost comparison, next to the salary, and compare the result with the freelancer and agency totals on the same basis. The tool does not know your figures and does not recommend an option. It adds up what you enter and lists the jobs each option does and does not cover.

This is general information about a federal rule in one jurisdiction, the UAE, and the portal is the authority to check. It is not legal, tax or employment advice, so take professional advice on your own position.

A word about me

This site is published by Web Marketing International FZCO, which sells managed PPC, so I gain if you choose an agency or a consultant over a hire. I have tried to write this so that it holds either way. If you want to see what I offer, my PPC management services page describes it, and the same comparison applies to me as to anyone else.

For the whole decision in order, read in-house, freelancer or agency for paid ads in the UAE.