CalcKitIf you work in the UAE private sector, your employer owes you a lump-sum payment called end-of-service gratuity when your employment ends. It is not a bonus or a favour — it is a legal entitlement under Federal Decree-Law No. 33 of 2021 (the UAE Labour Law), Article 51. The amount follows a fixed formula based on your basic salary and your length of service, so you can work out exactly what you should receive before you sign anything.
The gratuity formula
Gratuity is calculated on your basic salary only — not your total package. First, find your daily wage:
Daily wage = basic monthly salary ÷ 30
Then apply two rates: for the first five years of service you earn 21 days of basic wage for each year; for every year beyond five you earn 30 days of basic wage. Add the two parts together. One hard limit applies: your total gratuity can never exceed two years' wages.
Worked example
Take an employee with a basic salary of AED 10,000 who completes 7 years of service. Daily wage = 10,000 ÷ 30 = AED 333.33. First five years: 21 days × 5 years × 333.33 = AED 35,000. Years six and seven: 30 days × 2 years × 333.33 = AED 20,000. Total gratuity = AED 55,000. Try your own numbers in our free Gratuity Calculator — it runs the same formula instantly.
Who qualifies for gratuity?
You qualify once you complete one full year of continuous service. It does not matter how the job ends — resignation, termination, retirement or mutual agreement all qualify under the current law. Less than a year of service means no gratuity, and any partial year after the first is paid proportionally (pro-rata). Note that domestic workers and some special employment categories follow separate rules.
Basic salary matters more than your total package
This is the detail that costs people thousands: housing, transport and schooling allowances, bonuses and overtime are excluded from the calculation. If your contract shows a low basic salary with most pay labelled as allowances, your gratuity shrinks. When negotiating an offer in the UAE, push for a higher basic component — it directly raises your end-of-service payout.
The two-year cap
No matter how long you serve, your gratuity cannot exceed the equivalent of two years' wages. For most employees this cap never bites, but very long-serving staff should still check it against their final figure.
When do you get paid?
Your employer must settle all end-of-service dues, including gratuity, within 14 days of your contract ending. If payment is delayed, you can file a labour complaint with the Ministry of Human Resources and Emiratisation (MOHRE). Some employers use a voluntary alternative end-of-service savings scheme instead of classic gratuity — if yours does, any gratuity earned before joining the scheme remains protected.