UAE Gratuity Calculation 2026: Formula, Examples and Rules

Gratuity, or end-of-service benefit, is a lump sum your employer owes you when your job ends, as long as you've worked for them for at least a year. It's set by Article 51 of Federal Decree-Law No. 33 of 2021, the UAE Labour Law, and the formula is simple once you know which salary figure to use. To skip the maths, enter your dates and basic salary in the gratuity calculator.

The formula

Gratuity is based on your last basic salary only. Housing, transport and other allowances don't count. A day's pay is your monthly basic salary divided by 30.

• For each of your first five years: 21 days' basic salary
• For each year after five: 30 days' basic salary
• Part years count pro rata, once you've completed the first full year
• The total can't exceed two years' wages (24 months' basic salary)

Written out: gratuity = (basic ÷ 30) × (21 × years up to 5 + 30 × years beyond 5).

Worked examples

The cap only applies after about 25 and a half years with one employer, so it doesn't affect most people.

Who qualifies

You're entitled to gratuity if you're a full-time private-sector employee and have completed at least one year of continuous service with the same employer. Mainland and most free zone employers follow the federal Labour Law.

There are three main exceptions:

• DIFC employees are covered by the DIFC Employee Workplace Savings plan (DEWS) instead of a lump sum.
• ADGM has its own employment regulations.
• UAE and GCC nationals enrolled in a state pension scheme follow those pension rules.

Part-time employees under the 2021 law earn gratuity in proportion to the hours they actually work.

Resigning vs being let go

Under the old law, if you resigned before five years you lost part or all of your gratuity. The 2021 law removed that reduction, so the amount is the same whether you resign, your contract ends, or you're let go. What matters is completing the first full year. If your employer disputes what you're owed, the Ministry of Human Resources and Emiratisation (MOHRE) handles the complaint.

What changes the amount

• Basic salary as a share of your package. Many UAE contracts set basic salary at 40–60% of the total. Two offers with the same total pay can produce very different gratuity. On a AED 20,000 package, a AED 12,000 basic earns AED 8,400 a year in the first five years, while a AED 8,000 basic earns AED 5,600.
• Unpaid leave. Days of unpaid leave are not counted as service.
• Money you owe the employer. Your employer can deduct outstanding amounts, such as a salary advance or loan, from your gratuity.
• Salary changes. The calculation uses your last basic salary, not an average. A raise late in your service increases the whole amount.

The optional savings scheme

Since 2023, mainland and free zone employers can choose to join a voluntary end-of-service savings scheme instead of paying a lump sum. The employer pays monthly into an approved fund: 5.83% of basic salary for each of your first five years, and 8.33% after that. Those percentages are the 21-day and 30-day rates spread across 12 months. The money is invested, so the final amount can be more or less than the standard gratuity, and it's held in your name rather than by the employer. Your employer will tell you if they've joined.

When you get paid

Your employer has to pay your gratuity and any other dues within 14 days of your contract ending. If they don't, you can file a complaint with MOHRE through its app or website. Keep your contract, salary slips and the cancellation or end-of-service paperwork, since the claim depends on your basic salary and dates.

Tax

The UAE doesn't tax gratuity. If your home country taxes residents on worldwide income, check whether the payment has to be declared there once you move back.

Planning with your gratuity

Gratuity isn't paid until you leave, so don't count it as savings you can use now. Check your expected amount each year with the gratuity calculator. If you plan to put it towards a deposit, a debt payoff or investments, compare options on a fixed deposit calculator before the money arrives.