Lesson 6 — Continuous service, raises, cuts and renewals
Continuous service is the input everything else depends on, and it has one rule that catches almost everybody.
Service runs from the earliest contract start on record. A renewed contract does not restart it. The module measures continuous service from the earliest contract start it can find for that employee, which is what Article 51 turns on, so an employee on their fourth two-year renewal has eight years of service and not two. Source: FDL 33/2021 Art. 51.
A raise revalues the whole of the past, not just the future. Because the gratuity is computed on the last basic wage, an increase today increases what the employee is owed for all of their past service at once. The module books that catch-up automatically, in the period the raise happens, because it measures the cumulative entitlement at today's wage and posts the difference against what earlier posted runs provided.
The worked example. Rania's basic wage rises from AED 12,000 to AED 15,000 with effect from 1 September 2026.
| Figure | At 31 August 2026 | At 30 September 2026 |
|---|---|---|
| Last basic wage | AED 12,000 | AED 15,000 |
| Continuous service | 7 years and 6 months | 7 years and 7 months |
| Days of gratuity earned | 180 days | 182.5 days |
| Daily rate | AED 400 | AED 500 |
| Cumulative provision | AED 72,000 | AED 91,250 |
| Accrual booked in the month | AED 1,000 | AED 19,250 |
Of September's AED 19,250, only AED 1,250 is the month itself — 2.5 days at the new daily rate. The other AED 18,000 is the revaluation of the 180 days she had already earned, now worth AED 100 more per day than they were in August. A pay review across a long-serving workforce produces this effect on every line at once, and it is the single largest month-on-month movement this provision ever shows.
Negative accruals are normal, and they are not errors. After a wage cut or a correction the liability has fallen, so the entry reverses accordingly. Suppose Marco's basic wage is corrected downward from AED 9,000 to AED 8,700 during September. His service reaches 28 years and 9 months, which is 817.5 days, and his daily rate falls to AED 290, so his cumulative provision becomes AED 237,075 against the AED 244,500 already posted. September's accrual on his line is minus AED 7,425, and the journal entry reverses that much of the liability.
The failure mode. Two data problems produce wrong service, and neither announces itself. The first is re-creating a renewed employee as a new record with a new start date, which resets service to zero and quietly deletes years of accrued entitlement from the provision. The second is an employee with no contract start date on record at all — service cannot be established, so they cannot be measured, and Lesson 8 shows you exactly where they end up. Before you trust a provision, sort your employee list by earliest contract start and look at the top and the bottom of it.