How UAE gratuity is calculated
Under Article 51 of the UAE Labour Law (Federal Decree-Law No. 33 of 2021), a full-time private-sector employee who has completed at least one year of continuous service is entitled to an end-of-service gratuity based on their last basic salary (not allowances such as housing or transport):
- 21 days’ basic salary for each of the first five years of service;
- 30 days’ basic salary for each year after the fifth;
- part of a year counts in proportion, once the first year is complete;
- days of unpaid absence are not counted as service;
- the total cannot be more than two years’ wage.
A daily wage is commonly worked out as the basic monthly salary ÷ 30, which is what this calculator uses. Under the 2021 law the gratuity no longer depends on whether you resigned or were dismissed.
Worked example
Basic salary AED 10,000 a month, 7 years of service:
- Daily wage: 10,000 ÷ 30 = AED 333.33
- First 5 years: 5 × 21 × 333.33 = AED 35,000
- Next 2 years: 2 × 30 × 333.33 = AED 20,000
- Total: AED 55,000 (well under the cap of 24 × 10,000 = AED 240,000).
When it is paid
Your employer should pay end-of-service dues within 14 days of the end of employment. Amounts you owe the employer can be deducted. If there is a dispute, you can complain to the Ministry of Human Resources and Emiratisation (MOHRE).
Who this does not cover
Emirati employees (covered by the pensions law), government employees, domestic workers, employees in the DIFC or ADGM free zones (they have their own employment laws and, in DIFC, the DEWS savings scheme), and anyone whose employer has moved them to the optional alternative end-of-service savings scheme.
Common questions people get wrong
- Allowances do not count. If your contract says basic AED 6,000 plus housing AED 3,000, gratuity is worked out on AED 6,000 only. Check your offer letter or payslip for the basic figure.
- The last basic salary is used – a rise in your final year raises the whole gratuity, because every year is paid at the final rate.
- Part years count. After the first full year, an extra 6 months adds half a year's entitlement.
- A new employer does not continue the count. Each employment is calculated separately; moving to a new company under a new contract starts again from zero.
Keep copies of your contract, payslips and cancellation papers until your final settlement is paid.