How is end of service gratuity calculated in the UAE?
| Service | Gratuity |
|---|---|
| Less than 1 year | No entitlement |
| Each of the first 5 years | 21 days of basic wage |
| Each year after the fifth | 30 days of basic wage |
| Maximum | Two years’ wage (24 months of basic salary) |
Daily wage = basic monthly salary ÷ 30. Parts of a year count proportionally once you have completed the first year. Example: a basic salary of AED 10,000 for 7 years = (5 × 21 + 2 × 30) × 333.33 = AED 55,000.
Key changes in the new law (from February 2022)
- Resigning no longer reduces gratuity: under the old law, resigning employees got a third or two thirds. Now they receive the full amount, like a terminated employee, as long as they completed a year.
- All contracts are fixed-term: the old limited/unlimited distinction for gratuity no longer applies.
- Part-time work: gratuity is prorated to working hours compared with full time.
- Payment: the employer must pay all dues within 14 days of the contract ending.
Frequently Asked Questions
Why only the basic salary?
Because the law calculates gratuity on the “basic wage”. Allowances such as housing and transport are not included unless your contract says otherwise.
I resigned after two years. Do I get the full gratuity?
Yes. Under the current law (Decree-Law 33 of 2021), resigning after completing a year doesn’t reduce gratuity. The one-third / two-thirds rule you may hear about belonged to the old 1980 law, which was repealed.
Why do some calculators give a slightly lower figure?
Some employers calculate the daily wage as (salary × 12 ÷ 365) instead of (salary ÷ 30), which lowers the amount by about 1.4%. This calculator uses ÷ 30, the common approach; in a dispute, MOHRE or the court decides.
I was dismissed for misconduct. Do I still get gratuity?
Under the current law, even dismissal for serious misconduct doesn’t automatically cancel gratuity once you’ve completed a year, unlike the old law. However, amounts you owe the employer by law or court judgment can be deducted.
What is the alternative savings scheme?
Since 2023 employers can opt into a voluntary scheme (Cabinet Resolution 96 of 2023), paying monthly contributions into an investment fund instead of gratuity: 5.83% of basic salary for the first 5 years and 8.33% after. If your employer is enrolled, this calculator doesn’t apply to you.
I work in Saudi Arabia. Which calculator should I use?
Use our Saudi end of service calculator; the Saudi Labor Law works differently (half a month then a full month per year, and resignation reduces the award).