UAE gratuity calculation is something every expat worker should understand before signing a contract and before leaving a job. Gratuity, also called end-of-service benefit, is a lump-sum payment your employer must pay when your employment ends after at least one year of continuous service. The amount depends on your basic salary and years of service. This guide explains the UAE gratuity calculation formula under the current labour law, with simple examples, resignation rules, deadlines and tips to make sure you receive every dirham you are owed.
Quick facts about UAE gratuity calculation:
- Applies to private-sector employees under Federal Decree-Law No. 33 of 2021 on labour relations.
- You need at least one year of continuous service.
- First 5 years: 21 days of basic salary for each year.
- After 5 years: 30 days of basic salary for each additional year.
- Total gratuity cannot exceed two years’ wages.
- Calculated on basic salary only, not allowances.
Many workers lose money simply because they do not know how the UAE gratuity calculation works. Some accept contracts with a very low basic salary, others do not check their final settlement. With a few minutes of reading, you can avoid these mistakes.
We also share a simple method you can use in place of an online gratuity calculator for the UAE, so you can check your employer’s figure yourself.
What Is Gratuity in the UAE?
Gratuity is a reward for long service. It is not a gift or bonus – it is a legal right. When your employment ends, your employer must pay your gratuity along with any unpaid salary, leave salary and other dues.
The UAE gratuity calculation rules described here apply to employees in the private sector on the mainland and in most free zones that follow federal labour law. Some financial free zones, such as DIFC and ADGM, use their own end-of-service schemes, and government employees follow pension or government HR rules.
Who Is Eligible?
You are eligible for gratuity if:
- You are a full-time employee in the private sector.
- You have completed at least one year of continuous service with the same employer.
- You are not in a category excluded by law or covered by a separate savings scheme.
Part-time workers are also entitled to gratuity, calculated in proportion to their working hours.
The UAE Gratuity Calculation Formula
The basic formula is simple once you know your daily basic wage.
Daily basic wage = Monthly basic salary ÷ 30
Then apply the following rules:
| Service period | Gratuity entitlement |
|---|---|
| Less than 1 year | No gratuity |
| 1 to 5 years | 21 days of basic salary for each year |
| More than 5 years | 21 days for each of the first 5 years + 30 days for each year after that |
| Maximum | Total cannot exceed 2 years’ wages |
Partial years are calculated proportionately, as long as you have completed one full year of service.
Why Basic Salary Matters
The UAE gratuity calculation uses your last basic salary only. Housing, transport, food, phone and other allowances are not included. Overtime, commissions and bonuses are also excluded unless your contract counts them as part of basic pay.
This is why a contract with AED 2,000 basic and AED 3,000 allowances gives far less gratuity than a contract with AED 4,000 basic and AED 1,000 allowances, even though the total salary is the same.
5 Worked Examples of UAE Gratuity Calculation
Let us apply the formula to common situations.
Example 1: 3 Years of Service
- Basic salary: AED 3,000
- Daily wage: 3,000 ÷ 30 = AED 100
- Gratuity: 21 × 100 × 3 = AED 6,300
Example 2: 5 Years of Service
- Basic salary: AED 6,000
- Daily wage: AED 200
- Gratuity: 21 × 200 × 5 = AED 21,000
Example 3: 8 Years of Service
- Basic salary: AED 12,000
- Daily wage: AED 400
- First 5 years: 21 × 400 × 5 = AED 42,000
- Next 3 years: 30 × 400 × 3 = AED 36,000
- Total: AED 78,000
Example 4: 2 Years and 6 Months
- Basic salary: AED 4,500
- Daily wage: AED 150
- Gratuity: 21 × 150 × 2.5 = AED 7,875
Example 5: 25 Years of Service (Cap Applies)
- Basic salary: AED 10,000
- Daily wage: AED 333.33
- First 5 years: 21 × 333.33 × 5 = AED 35,000
- Next 20 years: 30 × 333.33 × 20 = AED 200,000
- Calculated total: AED 235,000
- Cap: 2 years’ wages = 24 × 10,000 = AED 240,000
- Payable: AED 235,000 (below the cap)
These examples show how the UAE gratuity calculation grows faster after five years, which rewards long-term employees.
UAE Gratuity After Resignation
Under the old labour law, employees who resigned with less than five years of service received only part of their gratuity. The current law changed this.
Under Federal Decree-Law No. 33 of 2021, all employment contracts are fixed-term, and the gratuity formula is the same whether you resign or the employer ends the contract, provided you have completed at least one year of service and leave lawfully. This is a big improvement for workers.
However, you must still:
- Serve the notice period stated in your contract (between 30 and 90 days under the law).
- Follow the correct resignation process through your employer and MOHRE.
- Avoid leaving without notice, which can lead to deductions or disputes.
When Must Gratuity Be Paid?
The law requires the employer to pay all end-of-service dues, including gratuity, within 14 days from the end of the employment contract. If you do not receive payment, you can file a complaint with MOHRE.
Deductions From Gratuity
An employer may deduct amounts you legally owe, such as:
- Loans or advances given by the company and agreed in writing.
- Damages proven through legal procedures.
- Amounts specified by a court order.
Days of unpaid leave are not counted in your service period. Sick leave and paid annual leave do count.
Gratuity Calculator UAE: Do It Yourself
You can use the free gratuity calculator on the MOHRE website or app. You can also check the result manually with this method:
- Find your latest basic salary on your payslip or labour contract.
- Divide by 30 to get your daily wage.
- Count your total service in years (subtract unpaid leave days).
- Multiply 21 × daily wage × years up to 5.
- Multiply 30 × daily wage × years beyond 5.
- Add both amounts and check it does not exceed 24 months of wages.
If your manual UAE gratuity calculation differs from your employer’s figure, ask HR for a written breakdown.
Gratuity Rules for Different Contract Types
| Contract type | How gratuity works |
|---|---|
| Full-time employee | Standard 21/30 day formula |
| Part-time employee | Formula applied in proportion to hours worked |
| Temporary or flexible work | Depends on total period and hours, as per the law |
| Free zone (federal law) | Same as mainland |
| DIFC / ADGM | Separate savings or end-of-service schemes |
| Domestic workers | Covered by the domestic workers law |
The Voluntary End-of-Service Savings Scheme
The UAE has introduced an optional savings scheme where employers can deposit monthly contributions into approved investment funds instead of paying a lump sum at the end. If your employer joins, your benefits may grow through investment returns. Ask HR whether your company participates and how to track your account.
How to Claim Unpaid Gratuity
If your employer refuses or delays payment:
- Request a written final settlement from HR.
- Keep copies of your contract, payslips and resignation or termination letter.
- File a complaint through the MOHRE website, app or call centre (800 60).
- Attend the amicable settlement process.
- If unresolved, MOHRE can refer the case to the labour court. Small claims may be decided by MOHRE directly.
Labour claims in the UAE are usually free for workers at the first stages.
Important: Do not sign a final settlement that says you received full dues if you have not received the money. Read every document before signing.
Tips to Maximise Your End-of-Service Benefits
- Negotiate a higher basic salary when you join, even if allowances are lower.
- Keep records of all promotions and salary changes.
- Avoid long unpaid leave unless necessary.
- Check your final settlement line by line.
- Plan your resignation date after completing a full year when possible.
Before signing your next contract, read our Dubai salary guide and learn how to verify your job offer on MOHRE.
Pros and Cons of the Current Gratuity System
| Pros | Cons |
|---|---|
| Same formula for resignation and termination | Based only on basic salary |
| Clear 14-day payment deadline | Cap of two years’ wages |
| Part-time workers included | Different rules in some free zones |
| Free complaint process through MOHRE | Unpaid leave reduces service |
Gratuity vs Provident Fund in India
Many Indian workers compare UAE gratuity with EPF in India. In India, both employer and employee contribute monthly to EPF. In the UAE, the worker does not contribute – the employer pays gratuity at the end. If you return to India, consider investing your gratuity carefully, for example in fixed deposits, mutual funds or NRI schemes, after taking professional financial advice.
Common Mistakes Workers Make
- Not knowing their basic salary. Always check your MOHRE contract, not just your offer letter.
- Leaving before one year. You get no gratuity if you leave before completing one year.
- Ignoring unpaid leave. Long unpaid leave reduces the service period.
- Signing blank settlement forms. Never sign before checking numbers.
- Missing complaint deadlines. Labour claims should be filed promptly after the contract ends.
UAE Gratuity Ready Reckoner Table
The table below shows approximate UAE gratuity amounts for common basic salaries. Use it as a quick check before you use a calculator.
| Basic salary (AED) | 1 year | 3 years | 5 years | 10 years |
|---|---|---|---|---|
| 1,500 | 1,050 | 3,150 | 5,250 | 12,750 |
| 2,500 | 1,750 | 5,250 | 8,750 | 21,250 |
| 4,000 | 2,800 | 8,400 | 14,000 | 34,000 |
| 6,000 | 4,200 | 12,600 | 21,000 | 51,000 |
| 10,000 | 7,000 | 21,000 | 35,000 | 85,000 |
| 15,000 | 10,500 | 31,500 | 52,500 | 127,500 |
For 10 years, the figure combines 21 days for the first five years and 30 days for the next five years. Always confirm your exact UAE gratuity with your employer’s final settlement.
UAE Gratuity for Blue-Collar Workers
Workers in construction, cleaning, security, driving and maintenance often have low basic salaries with free accommodation and food. Their UAE gratuity is still calculated on basic pay only. For example, a labourer with a basic salary of AED 1,200 who works for four years receives about 21 × 40 × 4 = AED 3,360.
That amount may look small, but it is your legal right. Many workers in labour camps never ask for their gratuity because they do not know the rules. Share this guide with friends and co-workers so everyone understands their end-of-service money.
UAE Gratuity When Changing Jobs Within the Same Group
If you move between companies that belong to the same business group, your service may or may not be treated as continuous. If the second company issues a new contract and the first company closes your file, you should receive your UAE gratuity from the first company at that point. If the transfer is recorded as continuous service, ask HR to confirm this in writing so you do not lose years of benefits.
UAE Gratuity and Absconding Cases
An absconding report is filed when an employer claims a worker left without notice. False absconding reports have caused serious problems for workers in the past. If you resign properly, serve your notice and keep proof of communication with your employer, you protect both your visa record and your UAE gratuity. If a false report is filed, contact MOHRE immediately.
What to Do With Your Gratuity Money
Your gratuity is often the biggest lump sum you receive in your Gulf career. Before spending it:
- Clear high-interest loans first.
- Keep at least six months of expenses as an emergency fund.
- Consider NRE fixed deposits or other safe options if you are returning to India.
- Avoid investing in schemes promoted by unknown agents promising very high returns.
- Speak to a licensed financial adviser for long-term planning.
Planning your next job? Read our Abu Dhabi jobs guide and UAE jobs for Indians guide.
UAE Gratuity Checklist Before You Leave a Job
Use this checklist in your last month at work so your UAE gratuity and other dues are paid correctly:
- Confirm your last working day in writing with HR.
- Ask for a draft final settlement showing basic salary, service days and the UAE gratuity amount.
- Check that unpaid leave days, if any, are correctly deducted and nothing else is.
- Make sure pending salary, leave salary for unused annual leave and any agreed bonus are listed separately.
- Confirm the air ticket entitlement if your contract includes a return ticket.
- Collect your experience certificate and salary certificate for future jobs.
- Ensure your work permit and visa are cancelled properly, or transferred if you have a new employer.
- Keep a copy of the bank transfer showing your UAE gratuity payment.
A clean exit protects your record with MOHRE and makes your next visa process much smoother.
Does UAE Gratuity Apply to Limited and Unlimited Contracts?
Before the 2021 law, the UAE had both limited and unlimited contracts, and the UAE gratuity rules were different for each, especially after resignation. Since February 2022, all private-sector contracts have been converted to fixed-term contracts. This simplified the system: the same formula now applies to everyone covered by the law. If you have an old contract, it should have been converted by your employer. Check the latest version of your contract on the MOHRE portal to be sure.
Remember that every worker’s situation is slightly different. If your contract has special terms, such as a higher gratuity rate or a company savings plan, those terms apply when they are better than the legal minimum. Ask HR for a copy of the policy and keep it with your contract.
Final Thoughts
UAE gratuity calculation is easy once you know the rules: 21 days of basic salary per year for the first five years, 30 days for each year after that, with a cap of two years’ wages. The current law treats resignation and termination equally, and your employer must pay within 14 days. Check your basic salary, keep records and use MOHRE’s tools if anything goes wrong. A little knowledge can protect thousands of dirhams of your hard-earned money.
Read the official rules on the MOHRE website and the UAE government portal on end-of-service benefits.
FAQs About UAE Gratuity Calculation
How is gratuity calculated in the UAE?
Divide your monthly basic salary by 30 to get your daily wage. Multiply by 21 for each of the first five years and by 30 for each year after that. The total cannot exceed two years’ wages.
Do I get gratuity if I resign in the UAE?
Yes. Under the current labour law, you receive gratuity on the same formula after resignation, as long as you completed at least one year of service and served your notice period.
Is gratuity calculated on basic or gross salary?
Gratuity is calculated on your last basic salary only. Allowances such as housing and transport are not included.
How soon must my employer pay gratuity?
Your employer must pay all end-of-service dues, including gratuity, within 14 days after the contract ends.
What can I do if my employer does not pay gratuity?
File a complaint with MOHRE through its website, app or call centre. MOHRE will try an amicable settlement and can refer the case to court if needed.
