How to calculate end-of-service gratuity in the UAE
Quick answer
For mainland UAE employees, end-of-service gratuity is 21 days of basic salary for each of the first 5 years of service, plus 30 days of basic salary for each year after that - calculated on the last basic salary, not allowances, and capped at two years of total remuneration.
- 1Work out the daily wage: last basic monthly salary / 30.
- 2Multiply by 21 days for each of the first 5 years.
- 3Multiply by 30 days for each year beyond 5.
- 4Add both amounts, pro-rating any partial year, and check the two-year cap.
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Mainland UAE employees who complete at least one year of continuous service are generally entitled to an end-of-service gratuity when their contract ends, calculated on the last basic salary rather than the full package of allowances. This is set out in Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (in force since 2 February 2022), which replaced the older 1980 labour law.
The calculation splits service into two tiers: 21 days of basic salary for each of the first 5 years, then 30 days for each year after that - with partial years paid pro rata and the total capped at two years of remuneration. Unlike the old law, resigning does not reduce the amount - the 2021 law removed the previous 1/3 and 2/3 reduction for resigning before 5 years, so a resignation and a termination after the same length of service now generally pay the same gratuity.
Quick reference, basic salary AED 10,000/month
| Years of service | Gratuity (AED) |
|---|---|
| 1 | 7,000 |
| 3 | 21,000 |
| 5 | 35,000 |
| 8 | 65,000 |
| 10 | 85,000 |
Step by step
Calculate the first 5 years
Daily wage x 21 x number of years, up to 5.
Calculate any years beyond 5
Daily wage x 30 x number of extra years.
Add both amounts and check the cap
The total cannot exceed two years of total remuneration.
UAE Gratuity Calculator
Tips
- Use basic salary only. If your offer letter shows a total package, check the payslip for the basic component first.
- Unpaid leave days can reduce your service period. Check your contract and payslips.
- Keep your last contract, payslips and the termination letter. These are what the final settlement is based on.
- If you work in a free zone such as DIFC or ADGM, ask HR which scheme applies, as these can differ from the mainland rules.
- Some employers now use an opt-in alternative: since Cabinet Resolution No. 96 of 2023, a mainland employer can choose to pay into a regular savings scheme for an employee instead of accruing a lump-sum gratuity. It is opt-in per employer, not automatic, so check your contract if your settlement does not match the formula below.
- This article is general information, not legal advice. Check the current law or ask MOHRE for your specific case.
Common problems
My employer calculated a lower amount.
Check that the daily wage uses basic salary / 30, that all complete years of service are counted, and that the 21-day and 30-day tiers were applied correctly.
I resigned instead of being terminated.
Under the 2021 law this no longer reduces your gratuity - the old reduction for resigning before 5 years was removed. Confirm the details of your case with MOHRE or HR, as notice periods and contract type can still affect the final settlement.
I was dismissed for misconduct.
This is a genuinely unsettled area - the law does not automatically forfeit gratuity for a dismissal under Article 120 (gross misconduct), but a court can still reduce or deny it in proven serious cases, and the employer may pursue separate damages. This calculator shows the standard formula; it cannot tell you how a specific misconduct dismissal will be treated, so get advice for that situation specifically.
Examples
7 years at AED 10,000 basic salary
Daily wage is 10,000 / 30 = 333.33. The first 5 years give 333.33 x 21 x 5 = 35,000; years 6 and 7 give 333.33 x 30 x 2 = 20,000. Total gratuity is 55,000 - well under the roughly 240,000 two-year cap on basic salary alone.
Frequently asked questions
- Who is eligible for end-of-service gratuity in the UAE?
- Employees who complete at least one year of continuous service with the same employer are generally entitled to gratuity when the contract ends.
- Is gratuity calculated on basic salary or total salary?
- Under the mainland labour law it is calculated on the last basic salary, not on allowances such as housing or transport.
- Is there a maximum gratuity amount?
- Yes. Gratuity cannot exceed two years of total remuneration (as defined in the law). This calculator and article use your basic salary for that cap when you do not enter a separate total-remuneration figure, which can only make the cap lower, never higher, than the true legal maximum - a deliberately conservative simplification where allowances exist and are not entered.
- What if I worked part of a year?
- Partial years are paid pro rata, so 5 years and 6 months counts as 5.5 years.
- Does resigning instead of being terminated reduce my gratuity?
- Not under the current law. The old 1980 law reduced gratuity by a third or two-thirds for resigning before 5 years; Federal Decree-Law No. 33 of 2021 removed that reduction, so resignation and termination after the same length of service now generally pay the same amount.
Related related tools
- UAE Gratuity CalculatorWork out UAE end-of-service gratuity from the last basic salary and years of service, with the 21-day and 30-day rates split out.
- UAE VAT CalculatorAdd or remove UAE VAT - 5% standard rate pre-filled, in AED.
- Percentage CalculatorFive percentage calculations in one place, with the answer explained in plain English.
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