UAE Gratuity Calculation (2026): Formula and Examples

In the UAE private sector, end-of-service gratuity is 21 days of basic salary for each of your first five years, and 30 days for each year after that, paid pro rata for part years, with a ceiling of two years’ wages. You must complete at least one year to qualify. Allowances don’t count.

The rules are in Article 51 of Federal Decree-Law No. 33 of 2021, the Labour Law that took effect on 2 February 2022, and are summarised on the government portal u.ae. This guide shows how to apply them to your own dates and salary, and where people go wrong. The UAE gratuity calculator does the arithmetic for you.

The formula

Four inputs decide the result:

1. Your last basic salary. Look at your contract or payslip. It’s usually 50–60% of the total package, sometimes less.
2. Your exact service. From your first working day to your last, minus unpaid leave and unauthorised absence.
3. Whether you passed one year. Before one year of continuous service, no gratuity is due.
4. Any amounts you owe the employer, which can be deducted.

The reason you left doesn’t matter under the 2021 law. Resigning, being let go and reaching the end of a contract all give the same gratuity, unless the employer has a lawful reason to withhold it.

Step 1: Count your service precisely

Count calendar days from your joining date to your last working day, subtract unpaid days, and divide by 365. A date calculator gives the exact day count.

Paid annual leave, public holidays and paid sick leave all count as service. Unpaid leave does not.

Step 2: Turn service into days of pay

Notice the step up after year five. Each extra year then earns a full month instead of 70% of one. If you’re close to five years, the timing of a resignation is worth thinking about.

Worked example 1: five and a half years

Rahul worked from 10 June 2019 to 9 December 2024 on a basic salary of AED 6,500 (total package AED 11,000).

1. Service: 5.5 years.
2. Days: 21 × 5 + 30 × 0.5 = 105 + 15 = 120 days.
3. Daily basic: 6,500 ÷ 30 = AED 216.67.
4. Gratuity: 120 × 216.67 = AED 26,000.

If he had used his total package, he’d have expected AED 44,000. That gap is the most common source of disappointment.

Worked example 2: unpaid leave

Mei joined on 1 January 2024 and left on 31 December 2025, with 40 days of unpaid leave. Her basic salary is AED 4,000.

1. Service: (731 − 40) ÷ 365 = 1.89 years (2024 was a leap year). She still passes the one-year minimum.
2. Days: 21 × 1.893 = 39.8 days.
3. Daily basic: 4,000 ÷ 30 = AED 133.33.
4. Gratuity: 39.8 × 133.33 = about AED 5,300.

Without the unpaid leave it would have been about 42 days, or roughly AED 5,600.

Worked example 3: the cap

Omar retires after 28 years on a basic salary of AED 20,000.

1. Days before the cap: 105 + 30 × 23 = 795 days, or 26.5 months.
2. Cap: 24 months × AED 20,000 = AED 480,000.
3. Gratuity: AED 480,000, the cap.

The cap only bites after about 25.5 years.

Common mistakes

Using the total salary. Gratuity uses basic salary only. Housing, transport and other allowances are excluded, even if they’re paid every month.

Assuming resignation cuts it. Under the old 1980 law, resigning from an unlimited contract after one to three years gave only a third, and three to five years gave two thirds. Those cuts are not part of the 2021 law, and old unlimited contracts have since had to be converted to fixed-term contracts. If you’ve worked for the same company since before February 2022, ask HR in writing how your pre-2022 years are being counted, and check the answer with MOHRE if it looks low.

Dividing by the wrong number. Most employers and MOHRE work out a day’s pay as monthly basic ÷ 30. A few use annual basic ÷ 365, which gives a slightly lower daily rate. Ask which your employer uses; the difference on AED 26,000 is about AED 360.

Forgetting part years. After the first year, every extra day counts. Three years and eight months is 3.67 years, not 3.

Counting probation separately. Probation is part of your service if you stay on after it.

Who is not covered by this formula

• UAE and GCC nationals fall under pension laws, not gratuity.
• DIFC and ADGM employees are covered by their own employment laws. DIFC uses its own workplace savings scheme (DEWS) instead of gratuity.
• Government employees have separate rules.
• Employers in the optional savings scheme. Since 2023 private employers may opt into a voluntary savings scheme instead of paying gratuity at the end. They contribute 5.83% of your basic salary each month for the first five years and 8.33% after that, and you receive the invested balance when you leave.
• Part-time workers earn gratuity in proportion to their contracted hours: the full-time amount multiplied by contracted annual hours ÷ full-time annual hours.

When and how it’s paid

The employer must pay your gratuity and other dues within 14 days of the end of the contract. Other dues usually include unused annual leave, any salary for your notice period, and a ticket home if your contract promises one. These are separate from gratuity, so check each line of the final settlement.

If payment is late or the amount looks wrong, raise it with HR in writing first. If that fails, file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE) through its app, website or call centre. Keep your offer letter, contract, last payslips and any leave records.

UAE vs Saudi Arabia

If you’re comparing offers across the Gulf, the rules differ more than people expect:

The Saudi end-of-service calculator and our guide to the Saudi end-of-service benefit cover the Saudi side.

FAQ

Is gratuity paid if I resign in the UAE?

Yes, if you’ve completed at least one year. Under the 2021 Labour Law the amount is the same whether you resign or the employer ends the contract.

Is gratuity calculated on basic or gross salary?

On basic salary only. Allowances such as housing and transport are not included.

How much gratuity for 2 years in the UAE?

42 days of basic pay. On a basic salary of AED 5,000, that’s 42 × (5,000 ÷ 30) = AED 7,000.

Can my employer deduct money from my gratuity?

Yes, but only amounts you genuinely owe, such as an unpaid salary advance or loan. Ask for a written breakdown of any deduction.

Sources

• u.ae: end-of-service benefits for private sector employees
• Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (Articles 51 and 53)

This guide explains the general rules and is not legal advice. Check your figures with MOHRE or a lawyer if a large amount is in dispute.