UAE end-of-service gratuity: how it is calculated, with examples
The 21-day and 30-day rule, why it is worked out on your basic salary and not your package, and three examples you can check your own number against.
- Gratuity is owed after one year of continuous service: 21 days of basic pay for each of the first five years, and 30 days for every year after that, capped at two years'' wages.
- It is calculated on your basic salary only — housing, transport and every other allowance are excluded — and the daily rate is basic pay divided by 30.
- Resigning no longer reduces the amount. The old rule that cut gratuity by a third or two thirds was abolished with the 2021 law.
- Unpaid leave is taken out of the service period; ordinary paid leave is not.
- Your final settlement, gratuity included, is due within 14 days of the contract ending.
Who gets it
Gratuity — end-of-service benefit, in the law''s own words — is owed to a full-time private-sector worker who completes one year of continuous service. Below a year there is no entitlement. Above it, every additional month counts, pro-rated.
The rule sits in Article 51 of Federal Decree-Law No. 33 of 2021, the law that replaced the 1980 labour law in February 2022. If someone quotes you a figure based on limited and unlimited contracts, they are quoting a law that no longer exists.
The formula
| Years of service | What you earn per year |
|---|---|
| The first 5 years | 21 days of basic pay |
| Every year after the 5th | 30 days of basic pay |
Two things decide the number, and both trip people up:
It is your basic salary, not your package. Housing, transport, phone, schooling, commission and bonus are all excluded. If your AED 20,000 package is AED 10,000 basic plus allowances, your gratuity is worked out on the AED 10,000.
The daily rate is the basic monthly salary divided by 30. Not divided by working days, not by 22.
There is a ceiling: the total gratuity cannot exceed two years'' wages. In practice this only binds after about thirty years of service, so most people never meet it.
Three worked examples
Three years, AED 8,000 basic
- Daily rate: 8,000 ÷ 30 = AED 266.67
- Per year: 21 × 266.67 = AED 5,600
- Three years: AED 16,800
Seven years, AED 12,000 basic
- Daily rate: 12,000 ÷ 30 = AED 400
- First five years: 21 × 400 × 5 = AED 42,000
- Years six and seven: 30 × 400 × 2 = AED 24,000
- Total: AED 66,000
Two years and six months, AED 10,000 basic
- Daily rate: 10,000 ÷ 30 = AED 333.33
- Per year: 21 × 333.33 = AED 7,000
- Two years: AED 14,000 · Six months: AED 3,500
- Total: AED 17,500
Resigning no longer costs you
Under the old law, resigning cut your gratuity — a third of it if you left between one and three years, two thirds between three and five. That rule was abolished with the 2021 law.
Today, resignation and termination produce the same figure, provided you serve your notice. If you leave without serving it, your employer may deduct pay in lieu, but that is a separate deduction from your final settlement, not a reduction of the gratuity calculation itself.
What does not count
- Unpaid leave. Days of unpaid absence are taken out of the service period.
- Allowances. See above; the calculation is on basic pay alone.
- Time before a break in service, unless the service was genuinely continuous.
Gratuity can be lost entirely only in the narrow dismissal cases the law lists — not because a manager is unhappy about how you left.
When you should be paid
Your final entitlements, gratuity included, are due within 14 days of the contract ending. That is a deadline, not a target, and it is one of the more commonly missed ones.
If the payment does not arrive, the route is a complaint to the Ministry of Human Resources and Emiratisation rather than a conversation with your former line manager.
The savings scheme, if your employer offers it
Since November 2023 there has been a voluntary alternative: instead of accruing gratuity on paper, an employer can pay monthly contributions into a regulated fund on your behalf — 5.83% of basic salary for workers with under five years of service, and 8.33% after that.
Those are not new numbers. 21 days out of 360 is 5.83%; 30 out of 360 is 8.33%. The scheme pays the same entitlement, monthly and invested, rather than in one lump at the end.
Joining is voluntary for the employer, and anything you accrued before they joined is preserved and paid under the old rules. You can also make additional contributions of your own if you want the investment return.
Before you leave
- Find the basic salary line in your contract, not the total. That is the number the calculation uses.
- Check your MOHRE contract rather than an offer letter; the registered contract is what governs.
- Count unpaid leave out of your service before you compare figures.
- Work out the number yourself before the settlement is presented to you.
Questions people also ask
Is gratuity calculated on my basic salary or my total package?
On the basic salary alone. Housing, transport, phone, schooling, commission and bonus are all excluded, which is why the figure is often much smaller than people expect from a large package.
Do I still get gratuity if I resign?
Yes, and the full amount. The old rule that cut gratuity for resigning between one and five years was abolished when the 2021 law replaced the 1980 one. What can still cost you is failing to serve your notice period, which allows a separate deduction of pay in lieu.
What if I have worked less than a year?
There is no gratuity entitlement below one year of continuous service. Once you pass a year, additional months count pro-rata.
How soon must my employer pay it?
Within 14 days of the contract ending, along with the rest of your final entitlements. If it does not arrive, the complaint goes to the Ministry of Human Resources and Emiratisation.
My employer has moved me to a savings scheme. Do I lose what I had?
No. Gratuity accrued before you joined is preserved and paid under the old rules, and the scheme covers service from the date you joined onwards. Participation is voluntary for the employer.
- Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships, Article 51
- Ministry of Human Resources and Emiratisation — Alternative End-of-Service Benefits Scheme
- The Official Portal of the UAE Government — End of service benefits