UAE end-of-service gratuity: how it is calculated, with a worked example

Who qualifies, the 21-day and 30-day rates, the two-year cap, and what changed for employees who resign.

End-of-service gratuity is one of the most common questions we receive from employees in the UAE. The rules are set by Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, which applies to private-sector employees on the mainland. Free zones such as the DIFC and ADGM have their own employment laws.

Who qualifies

You become entitled to gratuity once you complete at least one year of continuous service with the same employer. Time spent on probation counts towards that year if you stay on after probation, but if employment ends during probation no gratuity is due.

How much

• 21 days of basic wage for each of the first five years of service.
• 30 days of basic wage for each year after the fifth year.
• Part of a year is paid in proportion, once the first full year is completed.
• The total can never exceed two years' basic wage.

Gratuity is calculated on the basic wage only. Housing, transport and other allowances are not included unless your contract says otherwise.

A worked example

Basic wage: AED 10,000 a month. Service: 7 years.
• Daily basic wage: 10,000 ÷ 30 = AED 333.33
• First 5 years: 5 × 21 = 105 days
• Years 6 and 7: 2 × 30 = 60 days
• Total: 165 days × 333.33 = AED 55,000
The two-year cap (AED 240,000) is not reached, so the full AED 55,000 is due.

Resigning no longer reduces gratuity

Under the old law, an employee who resigned could lose part of the gratuity depending on length of service and contract type. The 2021 law removed that reduction. If you have completed one year, you receive the same gratuity whether you resign or the employer ends the contract, as long as you give the notice your contract requires.

When it must be paid

The employer must pay all end-of-service dues, including gratuity, within 14 days of the end of employment. The employer may deduct amounts you owe to the employer, but cannot simply withhold gratuity as a penalty. If payment is late or disputed, you can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE), which will try to settle it before the case goes to court.

Practical tips

• Keep your contract, salary certificates and payslips: the basic wage stated there is the figure that counts.
• Check that your start date is correct in MOHRE records.
• Get your final settlement in writing and check the calculation before signing.

You can ask the LexArab assistant to calculate your gratuity: tell it your basic wage, start date and end date.

This article is general legal information based on Federal Decree-Law No. 33 of 2021, not legal advice for your situation.