UAE End of Service Gratuity 2026: How to Calculate What Your Employer Owes You

I have watched too many Indian expats in the UAE accept a gratuity number without ever checking it, so this guide exists to give you the exact formula before you sign that final settlement. End of service gratuity is one of the most misunderstood benefits in the UAE. Many employees accept whatever number HR hands them on their last day because they have no way to check it. Others lose their gratuity entirely because they resign a few weeks before completing one year of service. Federal Decree-Law No. 33 of 2021, the new UAE Labour Law that took effect in February 2022, clarified and updated the rules that now apply to all private sector employees. This guide explains exactly what you are owed and how to work it out, with the UAE gratuity calculator to run your own number.

Who is eligible for UAE gratuity?

All private sector employees under UAE Labour Law qualify for gratuity once they meet a few conditions. You need to have completed at least one year of continuous service. You must not be a domestic worker, since those roles fall under separate regulations. And you must not have been dismissed for serious misconduct under Article 44, which wipes out the entitlement.

• You have completed at least one year of continuous service.
• You are not a domestic worker, who is covered by Federal Decree-Law No. 9 of 2022 with a different calculation.
• You were not terminated for serious misconduct under Article 44.

Free zone employees are generally covered by UAE Labour Law unless their free zone runs its own employment rules. The two big exceptions are the DIFC and ADGM financial free zones, which have their own employment regulations and their own gratuity treatment. If you work inside one of those, check your specific zone's rules rather than assuming the federal formula applies.

The gratuity formula under the 2022 law

The calculation rests on your basic salary, and only your basic salary. Housing, transport and other allowances do not count. The structure is simple once you see it. For each of your first five years you earn 21 calendar days of basic pay. For every year after the fifth you earn 30 days of basic pay. The whole entitlement is capped at two years of total basic salary, which almost nobody reaches. These figures are set out on the UAE government's end of service benefits page.

• Years 1 to 5: 21 calendar days of basic salary for each year of service.
• After 5 years: 30 calendar days of basic salary for each additional year.
• Maximum: two years of total basic salary.

To turn days into money you first find your daily wage. That is your monthly basic salary divided by 30. Multiply the daily wage by the number of gratuity days you have earned and you have your figure.

A worked example

Take an employee on a monthly basic salary of AED 5,000 who has worked for seven years and three months. The daily wage is AED 5,000 divided by 30, which gives AED 166.67. For the first five years the gratuity is 5 multiplied by 21 days multiplied by AED 166.67, which comes to AED 17,500.

The remaining two years and three months count as 2.25 years at the higher 30 day rate. That is 2.25 multiplied by 30 days, or 67.5 days, multiplied by AED 166.67, which works out to AED 11,250. Adding the two parts together gives a total gratuity of AED 28,750. The two year cap would be 24 multiplied by AED 5,000, or AED 120,000, so the AED 28,750 is well under the ceiling and is paid in full.

Resignation versus termination

This is where the new law made the biggest difference. Under Federal Decree-Law No. 33 of 2021, both resignation and termination receive exactly the same gratuity calculation. The old law had resignation penalties that cut your gratuity if you left early, and the 2022 law removed them. Whether you resign or your employer lets you go, the formula is identical.

The one exception is termination for serious misconduct under Article 44, which covers things like theft, assault or disclosing company secrets. In those cases the employer can withhold gratuity entirely. For ordinary resignations and standard terminations, your gratuity is safe.

What counts as basic salary?

Because the entire calculation runs on basic salary, the split between basic and allowances on your contract matters enormously. The only figure that counts is the fixed monthly amount your contract calls basic salary. Everything else is excluded.

• Housing allowance is not included.
• Transport and food allowances are not included.
• Commission, incentives and overtime pay are not included.
• Annual and end of year bonuses are not included.

A common employer practice is to keep basic salary artificially low and load the rest of the package into allowances, which legally shrinks the gratuity obligation. If your basic salary is below 30 percent of your total package, it is worth raising the question with HR or seeking guidance from the Ministry of Human Resources and Emiratisation. Knowing this before you sign a contract is far better than discovering it on your last day.

How partial years are handled

Gratuity is pro-rated for the months and days you work in your final year, so you do not lose the fraction. Suppose you complete three years and eight months. The three full years give 3 multiplied by 21, or 63 days of basic pay. The eight months give 8 divided by 12 multiplied by 21, which is 14 days. Together that is 77 days, multiplied by your daily wage. The same logic applies to the higher 30 day rate once you pass five years.

Gratuity and the type of contract

Since the 2022 law, almost all UAE contracts are fixed term. If a fixed term contract runs its course and is not renewed, your full gratuity is paid. If you leave before the contract ends, you may owe a penalty, so read the early termination clause carefully. Older unlimited contracts have largely been converted, but the principle is the same: complete your obligations and the gratuity follows the standard formula on either resignation or termination.

When must your employer pay?

UAE Labour Law requires gratuity to be paid within 14 days of the end of employment. If your employer delays the payment or pays the wrong amount, you have a clear route to challenge it. File a complaint with the Ministry of Human Resources and Emiratisation. You can call 800 60 or lodge the case online at mohre.gov.ae. Keep your contract, payslips and a copy of your final settlement so you can show your basic salary and service dates.

Gratuity and the new savings schemes

From January 2026, voluntary alternatives to the traditional end of service benefit have expanded. The DEWS scheme in the DIFC and similar qualifying schemes in other zones let some employers contribute to an invested pension style pot instead of carrying a gratuity liability. In most cases you choose between the classic gratuity and the qualifying scheme, so check your contract to see which one applies to you and whether you have an option.

Calculate your UAE gratuity

The fastest way to check what you are owed is to run the numbers yourself. Our UAE gratuity calculator asks for your basic salary, service years and months, then shows the calculation broken down across the 21 day and 30 day periods. Take that figure into your final settlement meeting and you will know immediately whether the offer is correct. For the rest of your money questions in the Emirates, our UAE finance tools cover salary, savings and currency in one place. Gratuity is only one slice of what you really earn, so see how the rest of the package fits together in our UAE take-home salary guide.

⚠️Disclaimer: This guide is based on Federal Decree-Law No. 33 of 2021. Free zone employees and domestic workers may have different rules, and DIFC and ADGM have separate regulations. This is general guidance, not legal advice. Consult MOHRE or a legal professional for your specific situation.