End-of-service gratuity is one of the most important benefits for private-sector employees in the UAE, yet many people only look at it when they are about to leave a job. Understanding how UAE gratuity is calculated helps you check your final settlement, compare job offers properly and plan your finances.
This guide explains the rules for private-sector employees on the mainland under Federal Decree-Law No. 33 of 2021, the current UAE Labour Law. Free zones such as DIFC and ADGM have their own employment laws, and government employees follow separate pension rules, so check which framework applies to you.
Who qualifies for gratuity
You are generally entitled to end-of-service gratuity if you have completed at least one year of continuous service with the same employer. If you leave before completing one year, no gratuity is due.
Under the current law, all employment contracts are fixed-term, and resigning no longer reduces your gratuity the way it could under the old law. As long as you complete the minimum service and the contract ends lawfully, the same formula applies.
The basic formula
Gratuity is calculated on your last basic salary — not your total package. Housing, transport and other allowances are normally excluded. The formula is:
- 21 days of basic salary for each year of service for the first five years
- 30 days of basic salary for each additional year after five years
- Partial years are counted in proportion to the time worked
- The total cannot exceed two years' worth of salary
Days of unpaid absence are not counted as service. Your employer may also deduct any amounts you legally owe the company.
To find your daily basic wage, divide your monthly basic salary by 30, or multiply it by 12 and divide by 365 — check which method your employer uses, because the result differs slightly.
A worked example
Imagine your basic salary is AED 6,000 per month and you have worked for seven years.
- Daily basic wage: AED 6,000 ÷ 30 = AED 200
- First five years: 21 days × 5 years = 105 days × AED 200 = AED 21,000
- Next two years: 30 days × 2 years = 60 days × AED 200 = AED 12,000
- Total gratuity: AED 33,000
If you had worked six years and six months, the half year after the first five would add 15 days (half of 30), worth AED 3,000.
Why basic salary matters when you accept an offer
Two offers with the same total monthly package can produce very different gratuity. A package of AED 12,000 with a basic of AED 8,000 builds gratuity much faster than one with a basic of AED 4,000 and large allowances. When you compare offers, always ask for the salary breakdown in writing — our salary negotiation guide covers how to raise this politely.
When it must be paid
The law requires the employer to pay all end-of-service dues, including gratuity, within 14 days of the end of employment. If your settlement is delayed or looks wrong, start by asking HR for a written breakdown.
Gratuity and the savings scheme
Some employers now offer an alternative end-of-service savings scheme approved by the government, where contributions are invested in a fund during your employment instead of being paid as a lump sum at the end. If your employer uses such a scheme, ask how contributions are calculated and how you can access your balance.
Common mistakes to avoid
- Calculating on the total package instead of basic salary
- Forgetting that unpaid leave reduces counted service
- Signing a final settlement you have not checked line by line
- Assuming free zone or government rules are the same as mainland rules
If you cannot resolve a dispute with your employer, you can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE) through its website, app or call centre.
Plan your next move
Knowing your gratuity entitlement puts you in a stronger position when you change jobs. This article is general information, not legal advice — for your own case, check the latest MOHRE guidance or speak to a qualified adviser. When you are ready for your next role, browse jobs on Hire Emirates Hub.