UAE Labour Law · Article 51
Your end-of-service benefit, to the dirham
21 days of basic pay for each of the first five years, 30 days for every year after — calculated on your basic salary, not your total package.
Basic only — exclude housing, transport and other allowances.
Gratuity is due after at least one full year of service.
Estimated gratuity
35,507 AED
How it works
The calculation, step by step
Daily wage = basic salary × 12 ÷ 365. Multiply by 21 days for each of your first five years, then 30 days for every additional year. Part years count pro-rata, resignation no longer reduces the entitlement under the 2022 Labour Law, and the total is capped at two years of basic salary. Unpaid absence days can be excluded from the service period.
Beyond the basic formula
Gratuity Q&A
Does it matter if I resign or I'm terminated?
No — since the 2022 Labour Law unified the rules, gratuity is calculated the same way whether you resign or are terminated (with notice), as long as you've completed at least one year of service. The old "resignation reduces your gratuity" scale from the pre-2022 law no longer applies.
What if I'm dismissed for gross misconduct?
Gratuity can be forfeited entirely if dismissal falls under the law's narrow list of serious-misconduct grounds (e.g. proven fraud, serious safety breaches). This is a high bar — ordinary performance issues don't qualify. See the Labour Law Q&A for the termination rules.
Is unpaid leave counted in my years of service?
No — unpaid leave days are generally excluded when calculating your total service period, which can slightly reduce your gratuity years versus your total employment duration.
How is a partial final year calculated?
Pro-rata — if you complete 6 years and 6 months, the 6 months count as half a year's worth of the applicable daily rate (21 or 30 days depending on which bracket you're in).
Does gratuity apply in free zones?
Most free zones follow the standard federal formula. Two notable exceptions: DIFC and ADGM replaced gratuity with defined-contribution savings schemes (DIFC's DEWS) — employers pay monthly into a fund instead of a lump sum at exit.
What if my employer refuses to pay?
Unpaid gratuity is one of the most common MOHRE complaints. File via MOHRE (800-60 or the app) — wage and end-of-service disputes get a fast-track mediation process, and unresolved cases move to the Labour Court.
Is gratuity taxed?
No — there's no personal income tax in the UAE, so your full gratuity and settlement amount is paid without deduction.
For the full picture — notice periods, termination grounds, leave — see the complete Labour Law Q&A, or calculate your full final settlement including leave encashment.
The rules behind the number
How gratuity is built up
End of service gratuity is set by Federal Decree-Law No. 33 of 2021. The formula is simple, and almost every dispute about it comes from one of three inputs rather than from the arithmetic.
The formula
| First five years | 21 days of basic salary for each year of service. |
|---|---|
| After five years | 30 days of basic salary for each additional year. |
| Overall cap | Total gratuity cannot exceed two years' pay. |
| Minimum service | One completed year. Below that there is no gratuity entitlement. |
| Partial years | Calculated pro rata once the first year is complete. |
A daily rate is derived from basic salary, then multiplied by 21 or 30 for each relevant year. On a basic of AED 12,000, the daily rate is roughly AED 394, so a year in the first five is worth about AED 8,280.
The three inputs that cause disputes
Basic salary, not total package. Gratuity is calculated on the basic component alone. Housing, transport and other allowances are excluded. Where basic is 60% of a package, the gratuity is 60% of what the employee expected.
Continuous service. Unpaid leave does not count toward service. Where employment transferred between related entities, whether service is treated as continuous depends on how the transfer was documented.
The final basic salary. The calculation uses the basic salary at the end of service, so a recent raise increases gratuity across all prior years, and a reduction has the opposite effect.
Resignation under the current law
Under the previous law, employees who resigned from unlimited contracts received a reduced gratuity on a sliding scale. That reduction was removed when all contracts became fixed-term in February 2022. Employees completing at least a year of service are now generally entitled to full gratuity whether they resign or are terminated. Dismissal on one of the specific grounds set out in the law is the exception.
Payment and disputes
Gratuity forms part of the final settlement, due within fourteen days of the end of employment, alongside unused leave, notice and outstanding wages. If it is not paid or the figure is disputed, the route is a complaint to MOHRE, which attempts conciliation before the labour court. See the settlement calculator for the full amount owed and the labour law guide for the complaint process.
Common questions
How is UAE gratuity calculated?
21 days of basic salary for each of the first five years of service, then 30 days for each subsequent year, capped at two years' total pay. One completed year of service is the minimum for entitlement.
Is gratuity based on basic salary or gross salary?
Basic salary only. Housing, transport and other allowances are excluded, which is why gratuity is often much lower than employees expect.
Do I still get gratuity if I resign?
Generally yes. The reduction that applied to resignation under the old unlimited contract regime was removed when all contracts became fixed-term in February 2022. Employees with at least a year of service are generally entitled to full gratuity.
Does unpaid leave count toward my service period?
No. Periods of unpaid leave are excluded from the service calculation used for gratuity.
When must gratuity be paid?
As part of the final settlement, within fourteen days of the end of the employment relationship.
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