Quick Summary UAE end-of-service gratuity is calculated on your basic salary only — not your total package. You get 21 days’ pay per year for your first 5 years of service, and 30 days per year after that. The total payout is capped at 2 years’ basic salary, no matter how long you’ve worked. You need at least one full year of continuous service to qualify. Under Federal Decree-Law No. 33 of 2021 (effective February 2022), resignation no longer reduces your gratuity entitlement. Want to know how to calculate gratuity in UAE instantly? Use our free gratuity calculator — just enter your salary and dates.
After years of working in the UAE, your end-of-service gratuity is likely one of the biggest single payments you’ll ever receive from an employer. Yet most expats have no idea how much they’re actually owed until the day they hand in their notice — and by then, some have already made decisions that cost them thousands of dirhams.
This guide on how to calculate gratuity in UAE breaks down everything you need to know: the exact formula, worked AED examples, how resignation versus termination affects your payout, what changed under the 2022 law update, and what to do if your employer gets the numbers wrong.
Learning how to calculate gratuity in UAE ensures you understand your rights and protect your final settlement.
What Is End-of-Service Gratuity in the UAE?
End-of-service gratuity is a mandatory lump-sum payment every private-sector employer in the UAE must pay when your employment ends — provided you’ve completed at least one year of continuous service.
It’s governed by Federal Decree-Law No. 33 of 2021 Regarding the Regulation of Employment Relationship, (see the official MOHRE labour law page), which came into effect on 2 February 2022. This law replaced the older labour framework and changed several key rules that still confuse many employees today.
Gratuity applies to expatriate employees working under private-sector employers regulated by the Ministry of Human Resources and Emiratisation (MOHRE). UAE nationals are covered under a separate pension scheme and are not eligible for the standard gratuity formula.
A few things gratuity is NOT:
- It’s not based on your total salary package
- It’s not discretionary — your employer cannot legally refuse it
- It’s not affected by your nationality (all expats qualify equally)
- It’s not taxable — you receive the full amount
💡 New to the UAE? Check our UAE Living Guide for Expats to understand your full rights as a resident.
UAE Gratuity Formula Explained (2022 Law Update)
The formula uses your last drawn basic salary — not your gross salary, not your total compensation package.
Basic salary is the fixed amount stated in your employment contract. It excludes:
- Housing allowance
- Transport allowance
- Medical allowance
- Food allowance
- Overtime pay
- Commissions and bonuses
If you’re unsure what your basic salary is, open your MOHRE-registered contract or payslip — it’s listed separately from allowances.
The Two-Tier Calculation
For Years 1–5 of service: (Basic Salary ÷ 30) × 21 × Years Worked
For Years beyond 5: [(Basic Salary ÷ 30) × 21 × 5] + [(Basic Salary ÷ 30) × 30 × Years Beyond 5]
The cap: Total gratuity cannot exceed 2 years of basic salary, regardless of how long you’ve worked. In practice, this cap only affects employees with 25+ years of service.
Gratuity Calculation Table — Worked AED Examples
Here’s how to calculate gratuity in UAE with worked examples at different service levels:
| Service Years | Basic Salary (AED) | Daily Wage (AED) | Formula | Total Gratuity (AED) |
|---|---|---|---|---|
| 1 year | 6,000 | 200 | 200 × 21 × 1 | 4,200 |
| 3 years | 8,000 | 266.67 | 266.67 × 21 × 3 | 16,800 |
| 5 years | 8,000 | 266.67 | 266.67 × 21 × 5 | 28,000 |
| 7 years | 10,000 | 333.33 | (333.33×21×5)+(333.33×30×2) | 55,000 |
| 10 years | 12,000 | 400 | (400×21×5)+(400×30×5) | 102,000 |
| 15 years | 15,000 | 500 | (500×21×5)+(500×30×10) | 202,500 |
Full worked example — 7 years at AED 10,000 basic salary:
- Daily wage: AED 10,000 ÷ 30 = AED 333.33
- First 5 years: AED 333.33 × 21 × 5 = AED 35,000
- Next 2 years: AED 333.33 × 30 × 2 = AED 20,000
- Total gratuity = AED 55,000
- 2-year cap check: AED 10,000 × 24 = AED 240,000 — no cap applies here.
👉 Skip the manual math. Our UAE Gratuity Calculator does this instantly — enter your basic salary and start/end dates and get your figure in seconds.
How to Calculate Gratuity in UAE: Step-by-Step Process
Now that you understand how to calculate gratuity in UAE, let’s work through it step-by-step. You need three things: your basic salary, your start date, and your last working day.
Step 1 — Find your basic salary Open your employment contract or latest payslip. Use only the “basic salary” figure. Example: if your contract shows AED 15,000 total with AED 5,000 housing and AED 2,000 transport, your basic salary is AED 8,000.
Step 2 — Calculate your daily wage Divide your basic salary by 30. AED 8,000 ÷ 30 = AED 266.67 per day.
Step 3 — Work out your total service years Count from your start date to your last working day. Subtract any unpaid leave days — they don’t count toward your service period. Paid annual leave, sick leave, and public holidays all count normally.
Step 4 — Apply the correct formula
- Under 5 years: Daily wage × 21 × total years
- Over 5 years: (Daily wage × 21 × 5) + (Daily wage × 30 × remaining years)
Step 5 — Check the 2-year cap Multiply your basic salary by 24. If your calculated gratuity exceeds this number, it gets capped there. For most employees, this isn’t a concern unless you’ve been with the same employer for 25+ years.
Resignation vs Termination — How It Differs in 2026
This is the most misunderstood area of UAE gratuity law — and where employees lose the most money through outdated advice.
Under the New Law (From February 2022 Onwards)
Under Federal Decree-Law No. 33 of 2021, resignation no longer reduces your gratuity entitlement. Whether you resign or are terminated, you receive the same full gratuity, calculated using the standard formula — as long as you’ve completed at least one year of continuous service.
This is a significant change from the old law, where employees who resigned before completing 5 years received a reduced amount. If someone tells you resignation means you get less gratuity, they’re working off outdated information.
Under the Old Unlimited Contract Rules (Still Relevant for Some)
Many employees who joined before February 2022 had unlimited contracts that were subsequently converted to fixed-term contracts. The old resignation rules applied to service under those unlimited contracts:
| Resignation Timing (Unlimited Contract) | Gratuity Entitlement |
|---|---|
| Less than 1 year | Zero |
| 1–3 years | ⅓ of calculated gratuity |
| 3–5 years | ⅔ of calculated gratuity |
| 5+ years | Full gratuity |
Termination by employer under old unlimited contracts always gave full gratuity from year one onwards.
What If You Have Mixed Service (Pre and Post 2022)?
If you started work before February 2022, your total service spans both law periods. For pre-2022 unlimited contract service, the old resignation rules may apply to that period. For service from February 2022 onward, the new rules apply — full gratuity regardless of how you leave.
This is exactly why using a proper gratuity calculator with your actual dates matters. The difference can be thousands of dirhams.
💡 Working as a freelancer? The Freelance Visa Dubai operates under different employment structures — check how your work arrangement affects your end-of-service rights.
The UAE Savings Scheme — What It Is and How It Affects Your Gratuity
In 2023, the UAE introduced an optional alternative to traditional gratuity under Cabinet Resolution No. 96 of 2023, known as the Alternative End-of-Service Benefits Scheme (the “Savings Scheme”). You can also review Cabinet Resolution No. 96 of 2023 on the Savings Scheme to understand the voluntary alternative.
This scheme is voluntary for employers. If your employer has enrolled, your gratuity situation changes.
How the Savings Scheme Works
Instead of accumulating traditional gratuity, your employer makes monthly contributions to an approved investment fund:
| Your Service Duration | Employer Monthly Contribution |
|---|---|
| Less than 5 years | 5.83% of basic salary |
| 5 years or more | 8.33% of basic salary |
These percentages mirror the equivalent daily accrual under the 21/30-day formula — the intent is to match or exceed traditional gratuity through investment growth over time.
What happens to your pre-scheme gratuity? It’s frozen at the enrolment date. When you leave, you receive that frozen amount plus your accumulated scheme fund balance.
Are You on the Savings Scheme?
As of 2026, most private-sector employers still use traditional gratuity. If your employer hasn’t told you they’ve enrolled in the Savings Scheme, you’re almost certainly on the standard system. You can verify by asking HR or checking your MOHRE employment file at mohre.gov.ae.
Common Gratuity Mistakes Employers Make (And How to Spot Them)
Employers — even large, established ones — routinely make errors in gratuity calculations. Knowing what to look for protects your money.
Mistake 1: Using gross salary instead of basic salary The most common error. Some payroll systems default to total compensation. Cross-check using only your basic salary figure from your employment contract.
Mistake 2: Deducting authorised leave from the service period Only unpaid leave days should be deducted — not annual leave, sick leave, or public holidays. Some HR teams subtract all absence days, which is incorrect and reduces your payout illegally.
Mistake 3: Applying old resignation rules to post-2022 service The ⅓ and ⅔ reduction rules for resignation no longer apply to service after February 2022. If your employer is applying them to your recent service, that’s a clear error.
Mistake 4: Delaying payment beyond 14 days UAE labour law requires full final settlement — including gratuity — within 14 days of your contract end date. Delays beyond this are a violation you can report to MOHRE.
Mistake 5: Using the wrong contract end date If you served a notice period, your gratuity accrues through your last actual working day — not the date you submitted your resignation letter.
🗣️ Real Talk
HR departments process hundreds of final settlements a year. Errors happen — and they almost never happen in your favour. Before you sign any final settlement document, run the numbers yourself. Use the formula in this guide or our free gratuity calculator. If the figures don’t match what HR calculated, don’t sign anything yet. Request a written breakdown of how they arrived at the number. Companies settle discrepancies quietly rather than face a formal MOHRE complaint — so asking the question is usually enough.
How to Claim Unpaid Gratuity via MOHRE (2026)
If your employer has underpaid, delayed, or outright refused to pay your gratuity, you have a clear legal route through the Ministry of Human Resources and Emiratisation (MOHRE).
Step 1 — Gather your documents Collect: your signed employment contract, all payslips (especially those clearly showing your basic salary), written confirmation of your start and end dates, and any communication with HR about your gratuity amount.
Step 2 — Calculate your correct entitlement Use our UAE Gratuity Calculator and document the result. You’ll reference this figure in your complaint as evidence of what you’re owed versus what you received.
Step 3 — File via MOHRE channels You have four options:
| Channel | How |
|---|---|
| MOHRE App | Available on iOS and Android — fastest option |
| MOHRE Website | mohre.gov.ae — online complaint submission form |
| Phone | Call 600 590 000 (Arabic and English support) |
| In-person | Visit your nearest Tawjeeh centre or MOHRE office |
Step 4 — Attend mediation MOHRE will contact your employer and attempt to resolve the dispute. Most cases are resolved within 14–21 days at this stage without escalating further.
Step 5 — Labour Court (if mediation fails) If your employer refuses to cooperate during mediation, MOHRE refers the case to the Labour Court. Courts take gratuity non-payment seriously — penalties for employers include fines and suspension from hiring new staff.
💡 Need help with other UAE government processes? Our UAE Government Services Guide walks you through official channels for common expat needs.
Gratuity for Part-Time and Domestic Workers
Part-time employees are entitled to gratuity under the new law — calculated proportionally based on hours worked.
Formula: (Your weekly contracted hours ÷ Standard full-time hours) × Full-time gratuity amount
Worked example:
- Standard full-time: 48 hours/week
- Your hours: 24 hours/week (50% of full-time)
- Basic salary: AED 5,000
- Full-time gratuity for 3 years: (5,000 ÷ 30) × 21 × 3 = AED 10,500
- Your entitlement: 50% × AED 10,500 = AED 5,250
Domestic workers — housemaids, drivers, nannies, cooks — are covered under the UAE Domestic Workers Law. The same one-year minimum rule applies. If hired directly by a family, that family pays the gratuity. If hired via an agency, the agency is responsible.
Frequently Asked Questions
Q1: How much gratuity will I get after 5 years in UAE? After exactly 5 years with a basic salary of AED 10,000, your gratuity is: (10,000 ÷ 30) × 21 × 5 = AED 35,000.
Every year beyond 5 is calculated at 30 days instead of 21, so the payout accelerates significantly after that mark.
Q2: Is gratuity calculated on basic salary or total salary in UAE?
Gratuity is calculated on basic salary only. Housing allowance, transport allowance, bonuses, overtime, and commissions are all excluded under Article 51 of Federal Decree-Law No. 33 of 2021.
Q3: Does resignation affect gratuity under UAE law in 2026?
No. Under the current law effective from February 2022, resignation does not reduce your gratuity. You receive the same amount as if you were terminated, provided you’ve completed at least one year of continuous service.
Q4: What is the minimum service period to qualify for gratuity in UAE?
You must complete at least one full year of continuous service. Employees who leave before 12 months are not entitled to any gratuity payment whatsoever.
Q5: Can my employer legally deduct money from my gratuity?
Yes, but only for specific legally defined reasons: outstanding loans or salary advances from the employer, compensation for damages caused by the employee, or notice period pay if you left without serving proper notice. Any other deductions are illegal.
Q6: How many days does an employer have to pay my gratuity?
Employers must pay the full final settlement — including gratuity — within 14 days of your contract end date. Delays beyond 14 days are a legal violation you can report directly to MOHRE.
Q7: Does unpaid leave reduce my gratuity?
Yes. Unpaid leave days are subtracted from your total continuous service period. So 60 days of unpaid leave over a 5-year career means your effective service is 5 years minus 60 days. Paid annual leave, sick leave, and public holidays count normally.
Q8: What happens to my gratuity if my employer joins the Savings Scheme?
Your traditional gratuity is frozen at the enrolment date. You receive standard gratuity for the period before enrolment, and your Savings Scheme fund balance (employer contributions + investment returns) for the period after, under Cabinet Resolution No. 96 of 2023.
Q9: Can I get gratuity if I work in a UAE free zone?
Most free zones follow MOHRE’s standard gratuity rules. However, DIFC (Dubai International Financial Centre) and ADGM (Abu Dhabi Global Market) operate under separate regulations with their own end-of-service schemes. Always check your employment contract to confirm which regime applies.
Q10: What if my employer refuses to pay my gratuity?
File a complaint through the MOHRE app, via mohre.gov.ae, or by calling 600 590 000. MOHRE will initiate mediation within 14–21 days. If unresolved, the case goes to the Labour Court — where employers face fines and potential suspension from hiring.