Editorial · Gratuity & end of service
Last verified 15 June 2026 · Confirm figures with MOHRE before relying on them
UAE end of service gratuity is calculated on your basic salary, not your total package, using service-length bands set by the Labour Law: a portion of salary per year for the early years and a larger portion thereafter, subject to the law's caps. The exact entitlement depends on your contract and how employment ended.
Gratuity is the lump sum a UAE employer pays you when you leave, and it is one of the most misunderstood numbers in an expat's finances. People budget for a figure based on their full salary, then receive far less, because the calculation runs on basic pay alone. Knowing the rules ahead of time changes how you plan a resignation, a move, or a departure from the country.
This guide sets out the calculation under the current UAE Labour Law, Federal Decree-Law No. 33 of 2021, with worked examples. The figures and bands here are checked against the official UAE government sources, because gratuity is a money matter where a wrong number causes real harm. Where your situation is unusual, confirm with the Ministry of Human Resources and Emiratisation or qualified legal advice before relying on a figure.
End of service gratuity is a statutory entitlement for private-sector employees who complete at least one year of continuous service. It is paid when the employment relationship ends, whether by resignation or by the employer. The amount is built from two inputs: your length of service and your last basic wage. The law converts service into a number of days of basic pay, then multiplies by your daily basic wage.
It is a benefit on top of your salary, not deducted from it, and it is separate from any pension or savings scheme your employer may also run. Under recent reforms some employers participate in voluntary alternative end-of-service savings schemes, but the default for most private-sector workers remains the gratuity calculation described here.
Basic salary, every time. The gratuity calculation uses your last basic wage and excludes allowances: housing, transport, and other benefits do not count. This is the detail that surprises people most. On a typical UAE contract, basic pay might be half or less of the total package, so a salary that looks generous can produce a modest gratuity, because only the basic slice feeds the formula.
Before you estimate anything, find the basic-salary line on your contract or payslip. That single figure, not your headline salary, is the basis for everything below. If your contract splits pay heavily into allowances, your gratuity will reflect the smaller basic figure, which is worth knowing when you negotiate a package in the first place.
The law sets two bands. For each of the first five years of service you earn 21 days of basic pay. For each year beyond five, you earn 30 days of basic pay. You must complete at least one full year to qualify at all, and years after the first are counted proportionally, so a part-year adds a proportional amount rather than nothing or a whole year.
To turn days into money, work out your daily basic wage, then multiply by the number of gratuity days. The daily wage is your monthly basic divided by 30. Once you have the daily wage, the rest is arithmetic, as the example below shows.
Worked example: 4 years on AED 15,000 basic
Assumptions: basic salary AED 15,000 a month, 4 completed years of service, all within the first five-year band.
Daily basic wage = 15,000 ÷ 30 = AED 500.
Days per year in the first band = 21, so each year earns 21 × 500 = AED 10,500.
Over 4 years: 4 × AED 10,500 = AED 42,000 total gratuity. Note this rests on AED 15,000 being basic pay; if AED 15,000 were the total package and basic were lower, the gratuity would be smaller.
Not under the current law. Federal Decree-Law No. 33 of 2021 removed the old distinction that cut gratuity for employees who resigned under unlimited contracts. Today, an employee who resigns receives gratuity on the same basis as one whose employment is ended by the employer, as long as the one-year qualifying period is met. This is a meaningful change from the previous regime, where resignation before certain service milestones reduced the entitlement.
There are still grounds on which gratuity can be lost, such as dismissal for specific serious causes defined in the law. Those are narrow and exceptional. For the ordinary case of resigning to take another job or to leave the country, the full calculation applies once you have completed a year.
The total gratuity is capped at the equivalent of two years' wage. For most employees the cap never bites, but after long service the running total can reach it, and beyond that point the gratuity stops growing. There are also process points worth knowing: gratuity is generally due to be settled within 14 days of the end of service, and unpaid leave does not count towards your service length.
Edge cases multiply quickly: free-zone employers such as those in the DIFC and ADGM may run their own end-of-service rules, part-time and flexible contracts are calculated proportionally, and alternative savings schemes change the picture entirely where an employer has opted in. If any of these apply to you, treat the standard calculation as a guide and confirm your specific entitlement with MOHRE or the relevant free-zone authority.
Once you know your figure, the question becomes what to do with it. If you are leaving the UAE, you may want to send it home at the best rate rather than lose value to a poor exchange margin. If you are staying, a lump sum can sit in a savings account or fixed deposit while you decide. For a rough figure now, use our money tools, and browse more planning guides in the knowledge hub.
Sources and verification: end of service gratuity rules under UAE Federal Decree-Law No. 33 of 2021, as published by the Ministry of Human Resources and Emiratisation and the official UAE government portal (u.ae). Bands, the one-year qualifying period and the two-year cap checked against these sources. This guide is general information and explains the standard private-sector calculation; it is not legal advice. Free-zone, part-time and alternative-scheme cases differ, so confirm your entitlement with MOHRE or qualified advice. Last verified 15 June 2026. moneycompare.ae is not licensed by the CBUAE or the SCA to advise.
Gratuity is calculated on your last basic salary, not your total package. Allowances such as housing, transport and other benefits are excluded from the calculation. Because basic pay is often only a portion of a UAE salary, gratuity can be smaller than people expect. Check your contract to see how much of your pay is classed as basic.
Under the current UAE Labour Law you earn 21 days of basic pay for each of the first five years of service, and 30 days of basic pay for each year beyond five. You must complete at least one year of continuous service to qualify. Years after the first are counted proportionally for part-years.
Under the current UAE Labour Law, Federal Decree-Law No. 33 of 2021, an employee who resigns receives gratuity on the same basis as one whose employment is terminated, provided they have completed at least one year of service. The earlier reduced-gratuity rules for resignation under unlimited contracts no longer apply.
Yes. Total end of service gratuity is capped at the equivalent of two years' wage. For very long service this cap can apply, so beyond a certain length of employment the gratuity stops growing. The cap is set in the UAE Labour Law and is calculated on the wage used for the gratuity.
No. You must complete at least one year of continuous service to be entitled to end of service gratuity under the UAE Labour Law. Below one year, no gratuity is payable. Once you pass one year, the calculation applies from your first day, including the qualifying year.
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