How UAE gratuity is calculated
End-of-service gratuity for private-sector employees is set by Article 51 of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, which has applied since 2 February 2022. It is the same for mainland companies and for free zones that follow the federal law:
- Eligibility: at least 1 year of continuous service. Below that, no gratuity is due.
- First 5 years: 21 days of basic salary for each year.
- After 5 years: 30 days of basic salary for each further year.
- Part of a year: paid in proportion, once you have completed the first year.
- Unpaid leave and absence do not count as service.
- Cap: the total may not exceed two years' wage.
- Salary used: your last basic salary — the wage in your contract, excluding allowances.
The law does not say how to turn a monthly salary into a daily one. The usual method is monthly basic ÷ 30, which matches the law's own rule that a month counts as 30 days (Article 67). Some employers use monthly basic × 12 ÷ 365 instead, which gives about 1.4% less. The calculator uses ÷ 30 and shows the other figure too.
Worked examples
3 years and 4 months on AED 10,000 basic
Someone with a basic salary of AED 10,000 who worked from 1 January 2023 to 30 April 2026 has 3 years and 120 days of service.
- Daily basic salary: 10,000 ÷ 30 = AED 333.33.
- One year at 21 days: AED 7,000.00. For 3 years and 120/365 of a year: AED 23,301.37.
- Using basic × 12 ÷ 365 for the daily rate instead: AED 22,982.17.
7 years on AED 15,000 basic
From 1 January 2019 to 28 February 2026 is 7 years and 59 days. The first 5 years earn 5 × 21 days of AED 500 = AED 52,500.00; the remaining 2 years and 59 days earn 30 days a year, AED 32,424.66. Total: AED 84,924.66.
When the cap applies
After 25.5 years, the formula reaches 24 months of basic salary. Someone with 30 years on AED 10,000 basic would get AED 285,000.00 by the formula, but the cap limits it to AED 240,000. The law says “two years' wage” without settling whether that means basic or total salary; the calculator applies it to basic salary, which is the lower and more common reading. It only matters after about 26 years of service.
Resigning or being dismissed makes no difference
Under the old Labour Law of 1980, employees who resigned within their first years could lose part of their gratuity. The 2021 law has no such reduction: you are owed the full amount whether you resign, your contract ends or your employer terminates it. Many websites and some older contracts still describe the old rules.
Likewise, the old distinction between limited and unlimited contracts no longer affects gratuity. Since February 2022, private-sector contracts are fixed-term and renewable, and the formula is the same for all of them.
Getting paid
- Deadline: your employer must pay your gratuity and other dues within 14 days of the end of the contract (Article 53).
- Deductions: only amounts you owe under the law or a court judgment — for example, an outstanding loan from the employer.
- If it is not paid: you can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE). Claims must be made within 2 years of the end of employment.
Part-time work
Part-time employees get gratuity in proportion to their hours. Someone working half the full-time hours on the first example above would get AED 11,650.68 — 50% of AED 23,301.37. Enter your hours as a percentage of full-time in the calculator.
The optional savings scheme
Since 2023, employers may choose to replace gratuity with monthly payments into an approved investment fund (Cabinet Resolution No. 96 of 2023). They pay 5.83% of basic salary a month for the first five years and 8.33% after that — exactly 21 and 30 days of salary a year. Gratuity earned before you joined the scheme is still paid when you leave. If your employer has enrolled you, your payout comes from the fund rather than from this formula.
DIFC and ADGM
The two financial free zones have their own employment laws, and the calculator has options for both:
- ADGM (Abu Dhabi Global Market): also 21 days' basic salary a year for five years and 30 days after, but the daily rate is annual basic ÷ 365, there is no two-year cap in the 2024 regulations, and payment is due within 21 days. On the first example above, ADGM gratuity would be AED 22,982.17.
- DIFC (Dubai International Financial Centre): since 1 February 2020, employers pay 5.83% of basic salary a month (8.33% after five years) into the DEWS savings plan or another qualifying scheme instead of building up gratuity. Only service before February 2020 earns gratuity.
Who does not get gratuity
- Employees with less than one year of continuous service.
- UAE nationals, who are covered by the GPSSA pension and social security system instead.
- Temporary work as defined in the Executive Regulations.
- Employees whose employer has moved them to the optional savings scheme, for the period they are in it.
This calculator gives an estimate based on the law. Your contract can give you more than the law, never less. If you disagree with your employer's figure, MOHRE decides. See our disclaimer.