End of service gratuity in the UAE: the formula, with a worked example

• Foreign full-time employees in the private sector who have completed at least one year of continuous service. Under one year, there is no gratuity.
• Part-time employees get a gratuity worked out in proportion to their contracted hours.
• UAE nationals are covered by the pension and social security system instead.
• Free zone employees in the DIFC and ADGM have their own employment laws (see below).

Days of unpaid absence don’t count toward your length of service.

• Years 1 to 5: 21 days’ basic wage for each year of service
• Year 6 onwards: 30 days’ basic wage for each year
• Part years: paid in proportion, once you’ve completed the first full year
• Cap: the total can’t exceed two years’ wage

The calculation uses your last basic wage only. Housing, transport and other allowances are left out, which is why the basic salary figure in your contract matters so much. In practice the daily wage is usually taken as the monthly basic salary divided by 30, which is how most calculators, including MOHRE’s, work it out.

Say your last basic salary is AED 9,000 a month and you worked 7 years and 6 months.

• Daily basic wage: 9,000 ÷ 30 = AED 300
• First 5 years: 5 × 21 × 300 = AED 31,500
• Remaining 2.5 years: 2.5 × 30 × 300 = AED 22,500
• Total gratuity: AED 54,000

The two-year cap here would be 24 × 9,000 = AED 216,000, so it doesn’t apply. Your employer can deduct amounts you genuinely owe, such as an unpaid loan or salary advance, but has to account for them.

Not under the current law. The old 1980 labour law cut gratuity for employees on unlimited contracts who resigned with less than five years’ service. Decree-Law No. 33 of 2021, in force since 2 February 2022, dropped those reductions. If you resign after at least one year of service and work your notice period as your contract requires, you get gratuity at the full rate.

This is general information, not legal advice. If your contract started under the old law or there’s a dispute about how your employment ended, get advice specific to your case.

Your employer must pay your end of service dues, including gratuity and any outstanding wages, within 14 days of the employment ending.

If that doesn’t happen, raise it in writing with HR first and keep a copy. If it’s still unpaid, you can file a labour complaint with the Ministry of Human Resources and Emiratisation (MOHRE) through its website, app or service centres. MOHRE tries to settle the dispute, and unresolved claims can be referred to the labour courts.

Since late 2023, private sector employers can opt in to a voluntary savings scheme approved by Cabinet Resolution No. 96 of 2023. Instead of a lump-sum gratuity, the employer pays monthly contributions into an approved investment fund:

• 5.83% of monthly basic salary for employees with under five years’ service
• 8.33% of monthly basic salary after five years

Employees can add voluntary contributions, and the balance plus returns is paid out within 14 days of the job ending. Ask HR whether your employer has joined, because it changes how your benefit is worked out.

The two financial free zones have their own employment laws:

• DIFC: since February 2020, gratuity for ongoing service has been replaced by monthly employer contributions to the DIFC Employee Workplace Savings plan (DEWS) or another qualifying scheme. Gratuity earned before then is still owed under the old rules.
• ADGM: follows the ADGM Employment Regulations, not the federal labour law. Check your contract and the regulations, or ask HR which scheme applies.

If you’re unsure how this applies to your contract, you can ask an expert in a $1 chat (priced in USD) at helpbyexperts.com.