How UAE gratuity is calculated
Gratuity is the lump sum a private-sector employer in the UAE pays a foreign worker when the job ends. The rules are in Article 51 of Federal Decree-Law No. 33 of 2021, the Labour Law that took effect on 2 February 2022.
The key points:
- One year first. You must complete at least one year of continuous service. Before that, no gratuity is due.
- Basic salary only. The calculation uses your last basic wage. Housing, transport, phone and other allowances are not included.
- Part years count. After the first year, extra months and days are paid pro rata.
- Unpaid days do not count. Unpaid leave and unauthorised absence are taken off your service.
- A cap. The total can never be more than two years’ wage.
- Resigning is fine. The 2021 law pays the same gratuity whether you resign, your contract ends, or your employer ends it.
The calculator counts your first and last working days, removes unpaid days, and divides by 365 to get years of service. A day’s pay is the monthly basic divided by 30, the method MOHRE and most employers use; Article 67 of the law counts a month as 30 days.
Worked example: 3 years and 6 months
Sara worked in Dubai for exactly 3 years and 6 months on a basic salary of AED 9,000 a month (her total package with allowances was AED 15,000).
- Service: 3.5 years.
- Days earned: 21 × 3.5 = 73.5 days.
- Daily basic wage: 9,000 ÷ 30 = AED 300.
- Gratuity: 73.5 × 300 = AED 22,050.
Her allowances do not change the result.
Worked example: 8 years
Imran earned a basic salary of AED 12,000 after 8 years with the same company.
- First 5 years: 21 × 5 = 105 days.
- Next 3 years: 30 × 3 = 90 days.
- Total: 195 days × AED 400 = AED 78,000.
The cap is 24 × 12,000 = AED 288,000, so it does not apply. The cap only matters after 25.5 years of service.
Quick reference: days of basic pay
| Years of service | Days of basic pay | With AED 10,000 basic |
|---|---|---|
| Under 1 | 0 | AED 0 |
| 1 | 21 | AED 7,000 |
| 3 | 63 | AED 21,000 |
| 5 | 105 | AED 35,000 |
| 10 | 255 | AED 85,000 |
| 20 | 555 | AED 185,000 |
| 30 | Capped at 720 | AED 240,000 |
Limited and unlimited contracts
Before 2022, UAE contracts were either limited (fixed-term) or unlimited. Under the old Federal Law No. 8 of 1980, a worker on an unlimited contract who resigned got only one third of the gratuity after 1 to 3 years, two thirds after 3 to 5 years, and the full amount after 5 years. Leaving a limited contract early could mean no gratuity at all.
The 2021 law removed both cuts. Every contract is now fixed-term, and employers had to convert unlimited contracts by 31 December 2023 after the deadline was extended. Article 68 still lets an employer settle service on an old unlimited contract under the 1980 rules. If that applies to you, open the comparison section under the result to see what the old rules would give.
What can change your gratuity
- Money you owe. Your employer may deduct amounts you owe, such as an unpaid loan or advance, from the gratuity.
- Part-time work. Part-time workers earn gratuity in proportion to their contracted hours.
- The savings scheme. Since 2023, employers can join a voluntary savings scheme instead. They pay 5.83% of your basic salary each month (8.33% after 5 years) into an investment fund, and you get the fund’s value when you leave.
- UAE nationals are covered by the pension law, not gratuity.
- DIFC and ADGM have their own employment laws and schemes.
When you get paid
Your employer must pay your gratuity and other dues within 14 days of the contract ending. If it is late or the amount is wrong, you can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE). Claims must be made within two years of the job ending.
Tips
- Check that the basic salary in your contract matches what your employer uses. Some employers keep basic low and allowances high, which shrinks gratuity.
- Keep proof of your start date, such as your offer letter or labour card.
- If you work in Saudi Arabia, the rules are different and include allowances. Use the Saudi end-of-service calculator.
- Thinking of investing your gratuity in gold? The gold price calculator shows the price by gram and karat. If you are paying zakat on your savings, use the zakat calculator.