End-of-service gratuity is often the biggest single payment an employee in the UAE receives when leaving a job. The formula is set by Article 51 of Federal Decree-Law No. 33 of 2021 and is the same whether you resign or your employer ends the contract.
The formula in four steps
- Daily basic wage = last monthly basic salary ÷ 30
- First five years: 21 days’ basic wage for each year
- Each year after five: 30 days’ basic wage for each year
- Cap: the total cannot exceed two years’ wage
You must have at least one year of continuous service. Part years after that count in proportion. Unpaid leave days are not counted.
Example 1: Two years, AED 5,000 basic
- Daily wage: 5,000 ÷ 30 = AED 166.67
- 2 × 21 × 166.67 = AED 7,000
Example 2: Five years exactly, AED 12,000 basic
- Daily wage: AED 400
- 5 × 21 × 400 = AED 42,000
Example 3: Ten years, AED 12,000 basic
- First five years: 5 × 21 × 400 = AED 42,000
- Next five years: 5 × 30 × 400 = AED 60,000
- Total: AED 102,000
Example 4: Six years and three months, AED 8,000 basic
- Daily wage: AED 266.67
- First five years: 5 × 21 × 266.67 = AED 28,000
- Remaining 1.25 years: 1.25 × 30 × 266.67 = AED 10,000
- Total: AED 38,000
Example 5: Four years with 60 days of unpaid leave, AED 7,500 basic
- Service counted: 4 years minus 60 days = 4 − 60/365 ≈ 3.836 years
- Daily wage: AED 250
- 3.836 × 21 × 250 ≈ AED 20,137
Why your number might differ from your employer’s
- Different basic salary. Gratuity uses basic only, not housing or transport. Check your latest payslip and contract.
- Different dates. Confirm your official start date, especially if you transferred between group companies.
- Unpaid leave. Your employer may have recorded unpaid days you have forgotten.
- Deductions. An employer can deduct amounts you owe, such as a documented loan.
Run your own numbers in the UAE gratuity calculator, which shows each step.
When it must be paid
All end-of-service dues, including gratuity, must be paid within 14 days of the contract ending. See final settlement timing.
Quick reference table
Gratuity in days of basic wage, before the two-year cap:
| Years of service | Days of basic wage |
|---|---|
| 1 | 21 |
| 3 | 63 |
| 5 | 105 |
| 7 | 165 |
| 10 | 255 |
| 15 | 405 |
| 20 | 555 |
Multiply the days by your daily basic wage (monthly basic ÷ 30). The cap is two years’ wage, which is 24 months of basic salary or 720 days at the daily rate, so it only applies after about 25 and a half years of service.
Frequently asked questions
Is gratuity taxed?
No. There is no personal income tax in the UAE.
Does probation count towards service?
Yes. Service runs from your first working day, including probation, as long as employment continues.
What if my employer goes out of business?
Gratuity is an employee entitlement. If an employer cannot pay, raise it with MOHRE, which can guide you on the options, including insurance schemes covering workers’ dues.
