Gratuity Calculation in the UAE: How Much You Are Owed When You Leave
If you are a foreign employee in the UAE private sector and you have completed at least one year of continuous service, you are entitled to an end-of-service gratuity when the employment ends. It is calculated on your basic salary only: 21 days' pay for each of the first five years and 30 days' pay for each year after that, pro rata for part of a year, capped at two years' wage in total. Your employer must pay it, with everything else you are owed, within 14 days of the contract ending.
That is the whole formula. The money is usually lost not in the formula but in the inputs: what counts as "basic", which days count as service, and what the employer deducts.
Does the federal formula apply to you?
The rules below come from Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships (Articles 51–53). Before running any calculator, check which of these you are:
- Mainland or most free zone employer — the federal formula applies.
- DIFC employer — no statutory gratuity since 1 February 2020; your employer pays into DEWS or an approved alternative scheme instead (see below).
- ADGM employer — a separate employment regime, not covered here.
- UAE national — end-of-service benefits follow the pensions and social security legislation, not Article 51.
- Employer enrolled you in the voluntary Savings Scheme — your payout is your fund balance, not the formula.
The formula, step by step
| Service | Days of basic salary per year |
|---|---|
| under 1 year of continuous service | nothing |
| years 1 to 5 | 21 days per year |
| each year beyond 5 | 30 days per year |
| final part-year | pro rata, provided you have at least one full year |
| overall cap | total may not exceed two years' wage |
Daily rate. The Decree-Law treats a month as 30 days and a year as 365 days (Article 67), so the daily basic rate is monthly basic salary divided by 30. Online calculators sometimes round differently; a gap of a few dirhams is normal, a gap of thousands means someone used the wrong salary figure.
"Basic" is not your package
The law distinguishes basic wage — the salary stated in the contract, without allowances or benefits in kind — from wage, which adds cash allowances and benefits. Gratuity runs on basic wage only. Housing, transport, utilities and other allowances are excluded. An offer of "AED 6,000 basic plus AED 14,000 allowances" is a AED 20,000 package but a AED 6,000 gratuity base. If you are negotiating an offer, this split matters more than almost anything else in it.
Worked example 1: three and a half years
Basic salary AED 10,000; service 3 years 6 months; no unpaid leave.
- Daily rate: 10,000 / 30 = AED 333.33
- One year: 21 × 333.33 = AED 7,000
- 3.5 years: 7,000 × 3.5 = AED 24,500
Worked example 2: seven years
Basic salary AED 15,000; service 7 years.
- Daily rate: 15,000 / 30 = AED 500
- First five years: 5 × 21 × 500 = AED 52,500
- Years six and seven: 2 × 30 × 500 = AED 30,000
- Total: AED 82,500
The two-year cap is not close. Calculated on basic salary alone, it bites only after roughly 26 years of service.
Worked example 3: 13 months in the job, no gratuity
The contract lasted 1 year and 1 month, including 60 days of unpaid leave. Unpaid days do not count as service (Article 51(4); Article 33 on unpaid leave). Qualifying service is 11 months — under one year — so no gratuity is due, and no pro rata amount either, because pro rata applies only once a full year has been completed.
Resigning does not cut your gratuity under Article 51
Many expat forums still quote reduced gratuity — "one third" or "two thirds" — for employees who resign. The current Article 51 contains no such reduction: the entitlement depends on length of service and basic salary, not on who ended the contract. If your employer applies a reduction, ask which provision it relies on.
What else belongs in your final settlement
- Salary for days worked in the final month.
- Notice pay, or payment in lieu if notice was not served (see our guide to termination of employment in the UAE).
- Accrued annual leave: under Article 29(9) you are paid for untaken leave days, and pro rata for part of the year, calculated on basic wage. Example: 12 untaken days on AED 10,000 basic = AED 4,000. This is separate from, and on top of, gratuity.
- Gratuity.
- Anything else your contract or the company's policies promise, such as a bonus or flight ticket.
All of it is due within 14 days of the end of the contract (Article 53).
Deductions the employer can make
Article 51(7) allows deductions of amounts owed by the employee under the law or a court judgment. Which deductions are allowed in detail is set by the Implementing Regulation (Cabinet Resolution No. 1 of 2022), and any specific deduction should be checked against it. A deduction "for visa costs" or "for training" with no basis in the law or the contract is worth challenging.
The voluntary Savings Scheme
Since 2023 employers may opt out of traditional gratuity for some or all staff and pay into an approved investment fund instead (Cabinet Resolution No. 96 of 2023; Ministerial Resolution No. 668 of 2023). According to the official portal u.ae:
- the employer contributes monthly 5.83% of basic salary for employees with under 5 years' service and 8.33% for those with more than 5 years;
- contributions are due within 15 days of the start of each month;
- gratuity accrued before enrolment must be calculated and settled under the law;
- employees may add voluntary contributions of up to 25% of their wage;
- on termination the employee receives all employer contributions plus returns within 14 days, and may keep the money invested or withdraw it.
The scheme covers the private sector and free zones.
DIFC: DEWS
The DIFC has its own Employment Law (DIFC Law No. 2 of 2019). From 1 February 2020 DIFC employers must enrol eligible employees in the DEWS plan or a qualifying alternative scheme, contributing 5.83% of monthly basic wage for the first five years and 8.33% for each year after. Employees with continuous service from before that date may still have accrued gratuity for the earlier period. Claims for unpaid final dues go to the DIFC Courts, with their own, shorter deadlines.
If the gratuity is not paid
- After the 14 days, send a written demand with your own calculation.
- Do not sign a "full and final settlement" for less than your calculation. The law voids waivers of statutory rights (Article 65), but you would have to prove it in a dispute.
- File a complaint with MOHRE. Deadlines and the AED 50,000 threshold for binding MOHRE decisions are covered in our termination guide; the wider map of forums is in employment disputes in the UAE.
Frequently asked questions
Is gratuity calculated on my total salary?
No. It is calculated on your last basic salary. Allowances are excluded.
Do I get gratuity if I resign after 18 months?
Yes. With more than one year of continuous service you receive 21 days' basic pay per year, pro rata for the extra six months, whoever ended the contract.
Does unpaid leave reduce my gratuity?
Yes. Days of unpaid absence are not counted as service, which lowers the amount and can push you below the one-year threshold.
When must the employer pay?
Within 14 days of the end of the contract, together with salary, leave pay and other entitlements.
I work in the DIFC. Where is my gratuity?
Since 1 February 2020 it is replaced by monthly DEWS (or equivalent) contributions. Check your DEWS account and any gratuity accrued for service before that date.
Sources
- Federal Decree-Law No. 33 of 2021 (Articles 1, 29, 33, 51–53, 65, 67), text on the official u.ae portal: https://assets.u.ae/api/public/content/eb65a60bbff949fa912eddd566613014?v=7174ed78 — checked 24.09.2026
- u.ae — End of service benefits for workers in the private sector (formula, basic salary, 14 days, Savings Scheme 5.83% / 8.33%): https://u.ae/en/information-and-services/jobs/Sector-of-employment/employment-in-the-private-sector/end-of-service-benefits-for-employees-in-the-private-sector — checked 24.09.2026
- u.ae — Pension schemes for expatriate workers: https://u.ae/en/information-and-services/moving-to-the-uae/expatriates-working-in-the-uae/pension-schemes-for-expatriate-workers — checked 24.09.2026
- DIFC Courts — FAQs on the DIFC Employment Law (DEWS from 1 February 2020): https://www.difccourts.ae/application/files/7117/1636/5975/DIFCC_PBP_FAQs_DIFC_Employment_Law.pdf — checked 24.09.2026
This is a general framework, not legal advice. Your figure depends on your contract, your employer's regime and your service history, and UAE law changes. We calculate it from your documents.