UAE gratuity and end of service calculator

End of service gratuity in the UAE, step by step

Gratuity, also called end of service benefit, is the lump sum a foreign employee on a full-time contract receives when their employment ends. It is set by Article 51 of Federal Decree-Law No. 33 of 2021, the UAE labour law, and works the same way whatever the job, the industry or the emirate. Four inputs decide it: the last basic salary, the length of continuous service, any unpaid absence, and the cap.

1. Check the employee has one full year of continuous service. Under one year, no gratuity is due. From one year, gratuity covers the whole period, including the first year.

2. Take the last basic salary. Gratuity uses the basic wage in force on the last day, not the gross salary. Allowances for housing, transport, phone or schooling do not count, unless the contract says gratuity is paid on a wider amount.

3. Work out one day's basic pay. Divide the monthly basic by 30, because the labour law counts a month as 30 days (Article 67). On AED 7,000, that is AED 233.33 a day.

4. Count the days earned. 21 days for each of the first five years and 30 days for each year after. Part years count pro rata: six extra months earn half a year's days.

5. Apply the cap. The total cannot exceed two years' wage, which for AED 7,000 basic is AED 168,000. In practice the cap is reached only after roughly 25 to 26 years of service.

Worked examples on AED 7,000 basic

The same basic salary across different lengths of service, calculated with the rule above. Use the calculator for any other salary.

Example: after seven years and six months on AED 7,000 basic, the employee earns 5 × 21 = 105 days for the first five years and 2.5 × 30 = 75 days after, so 180 days × AED 233.33 = AED 42,000.

Dubai, Abu Dhabi and the other emirates

On the mainland, the end of service rule is the same in every emirate: Dubai, Abu Dhabi, Sharjah, Ajman, Ras Al Khaimah, Fujairah and Umm Al Quwain all apply the federal labour law. Most free zones do too, including DMCC and Jebel Ali (Jafza). Two financial free zones are different:

So an "end of service calculator for Dubai" and one for Abu Dhabi give the same answer for a mainland contract. See UAE free zones and their employment rules for the DIFC and ADGM in detail.

Resignation, termination and the end of the contract

Under the 2021 law, how the contract ends does not change the gratuity. An employee who resigns with proper notice, one whose contract is not renewed and one whose employer ends the contract all receive the same amount after one year of service. The old 1980 law cut gratuity for employees who resigned during their first five years; that rule ended when the new law came into force on 2 February 2022, and all contracts are now fixed-term.

Gratuity is separate from the notice period allowance. If either side ends the contract without serving the notice in the contract (between 30 and 90 days), it pays the other the wage for the notice not served (Article 43). That allowance is added to, never taken from, the gratuity. An employee dismissed unlawfully can also be awarded up to 3 months' wage by a court, on top of gratuity (Article 47).

An employee dismissed without notice for serious misconduct under Article 44 still keeps the gratuity earned. The 2021 law does not take gratuity away as a penalty, though the employer may deduct amounts the employee owes under the law or a court judgment (Article 51(7)).

What counts as service

Service is counted from the first day of work, including probation if the employee stays on after it. Renewals and extensions of a fixed-term contract with the same employer are added together as continuous service (Article 8). Paid annual leave, paid sick leave and maternity leave count as service.

Days of unpaid absence, and unpaid leave taken by agreement, do not count (Articles 33 and 51). If an employee had 20 days of unpaid leave over six years, take those days off the service before calculating. The calculator does this when you leave them out of the months you enter.

For part-time and other work patterns, the Implementing Regulation sets how gratuity is worked out (Article 52). Domestic workers have their own law, Federal Decree-Law No. 9 of 2022.

Paying the final settlement

The employer must pay gratuity and every other entitlement within 14 days of the contract ending (Article 53). A complete final settlement usually has four parts:

If an employee dies, the family receives these amounts within 10 days (Article 15). Use the UAE leave salary calculator for unused leave. If an amount is disputed, the employee can complain to MOHRE, which decides claims below AED 50,000; workers pay no court fees on claims up to AED 100,000 (Article 55). The UAE labour law guide covers notice, termination and disputes in full.

Gratuity at different salaries

Gratuity grows with both salary and service. The table shows the amount due on common basic salaries, using the same Article 51 rule.

Each year in the first five adds 21 days' basic pay, about 70% of one month's basic salary. Each year after five adds 30 days, a full month's basic. That is why gratuity rises faster from the sixth year.

Gratuity and tax

The UAE does not tax employment income, so gratuity is paid in full with no income tax withheld in the UAE. Employees who are tax resident in another country should check whether that country taxes it. For employers, gratuity is a staff cost: companies within UAE corporate tax normally recognise it as an expense as it is earned or when it is paid, depending on how they account for it.

For employers: setting gratuity aside every month

Gratuity is owed at the end of service, but it is earned month by month. Many employers record a monthly provision so the cost is not a surprise when someone leaves. For an employee in their first five years, one month of service earns 21 ÷ 12 = 1.75 days' basic pay; from the sixth year, 2.5 days.

Recalculate the provision whenever the basic salary changes, since the final gratuity uses the last basic salary for the whole period of service, not the salary in force when each year was earned. Employees with less than a year of service are not yet owed gratuity, but the provision covers them in case they pass the one-year mark.

What to check before you rely on the number

The basic salary in the contract. Use the figure in the latest contract or MOHRE contract record, after any raises, not the figure in the offer letter.

The start date. Service runs from the first working day with this employer, including probation. A new contract with the same employer after a break may restart the count; renewals and extensions without a break do not.

Unpaid leave. Check the leave records for unpaid days and take them off the service.

Where the contract is registered. Mainland and most free zones use this rule; the DIFC and ADGM do not.

The savings scheme. If the employer has moved employees to MOHRE's savings scheme, the gratuity for the covered period is paid by the fund instead.

The contract terms. A contract or company policy can promise more than the law, for example gratuity on a higher amount or with no cap. The law is the minimum.

Special cases: death, disability and company closure

Death of the employee. The contract ends on the employee's death (Article 42). The employer pays the gratuity, final wages and other entitlements to the family within 10 days of the death or of learning about it, and an employee can name in writing the family member who should receive them (Article 15). The employer also pays to send the body home if the family asks.

Permanent full disability. The contract ends when a medical certificate proves the employee cannot work at all (Article 42). Gratuity is due as normal. If the disability came from a work injury, compensation under Article 37 is paid on top.

Ill health. An employer may not end the contract for ill health before the employee has used the sick leave the law gives them (Article 46). If the contract ends after that, gratuity and every other entitlement are paid in full.

The business closes or goes bankrupt. Permanent closure, bankruptcy and some economic reasons end contracts (Article 42), but they do not cancel what employees have earned. Gratuity for every eligible employee is part of what the employer must pay.

If the gratuity is not paid

An employee who is not paid within 14 days, or disagrees with the amount, can file a complaint with MOHRE. MOHRE first tries to settle it between the two sides. It issues a final decision itself when the amount claimed is under AED 50,000 or the two sides agree; otherwise it refers the case to the labour court with a summary, and the court sets a hearing within three working days (Article 54). Workers and their heirs pay no court fees on claims up to AED 100,000 (Article 55). Bring the contract, salary records or WPS statements, and the leave and absence records that support the calculation.

The savings scheme alternative

Mainland and free-zone employers may join MOHRE's optional savings scheme instead of accruing gratuity. The employer pays monthly contributions for each employee into an approved fund, the money is invested, and the employee receives the balance when employment ends. For employees covered by the scheme, the employer does not pay the Article 51 gratuity for the period covered. Ask the employer whether you are in the scheme before relying on this calculator.

Common mistakes

Using gross salary. Gratuity is on basic salary only, so a calculation on the full package overstates it.

Dividing by 365. Some payroll teams use basic × 12 ÷ 365 for one day's pay, which gives a slightly lower figure. The law counts a month as 30 days, so this calculator divides by 30.

Forgetting part years. Months beyond the last full year count pro rata once the first year is complete.

Counting unpaid leave. Unpaid days come off the service before the calculation.

Applying the old resignation cuts. They ended with the 1980 law.