How UAE gratuity is calculated
Under the UAE Labour Law, a private sector employee who completes at least one year of continuous service is entitled to an end-of-service gratuity based on the last basic wage:
- 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
- Part years are paid in proportion to the time worked
- The total cannot exceed two years' wage
- No gratuity is due for less than one year of service
Gratuity = daily wage × (21 × years up to 5 + 30 × years after 5)
Worked example
An engineer with a basic salary of AED 9,000 and 7.66 years of service: the daily wage is AED 300. The first 5 years give 5 × 21 × 300 = AED 31,500. The remaining 2.66 years give 2.66 × 30 × 300 = AED 23,940. The total is about AED 55,440.
Does resignation reduce gratuity?
Under the older law, employees who resigned early received a reduced gratuity. Federal Decree-Law No. 33 of 2021 removed those reductions for private sector employees, so gratuity is calculated the same way whether you resign or your employer ends the contract.
Frequently asked questions
Is gratuity based on basic or gross salary?
On the last basic wage only. Allowances such as housing and transport are not included.
When must the employer pay gratuity?
Within 14 days of the end of the employment contract, together with other final dues.
Does this apply to government or free zone employees?
No. Federal and local government staff have their own pension or gratuity rules, and some free zones such as DIFC and ADGM use separate schemes. This calculator follows the federal private sector law.
Is unused annual leave part of gratuity?
No. Unused leave is paid separately as part of the final settlement.