End-of-Service Gratuity in the UAE: How It Is Calculated

End-of-service gratuity is the lump sum a private-sector employee in the UAE receives when their employment ends. It is one of the most common sources of disputes between employers and employees, usually because of misunderstandings about how it is calculated.

This guide covers employees under the federal labour law on the mainland. Free zones such as DIFC and ADGM, and government employment, have their own rules.

Who is entitled

Under Federal Decree-Law No. 33 of 2021 on the regulation of labour relations, a full-time employee who completes at least one year of continuous service is entitled to gratuity when the employment ends. Under the current law, gratuity is not reduced because the employee resigned.

How it is calculated

Gratuity is calculated on the last basic wage, not the total salary. Allowances such as housing and transport are not included unless the contract says otherwise.

• 21 days' basic wage for each of the first five years of service.
• 30 days' basic wage for each additional year after five.
• Partial years count proportionally.
• The total cannot exceed two years' wage.
• The employer can deduct amounts the employee legitimately owes.

A worked example

An employee with a basic wage of AED 10,000 a month leaves after 7 years:

• First 5 years: 5 × 21 = 105 days
• Next 2 years: 2 × 30 = 60 days
• Total: 165 days of basic wage, roughly 5.5 months, or about AED 55,000.

The exact amount depends on how the daily wage is computed and on any deductions, so treat this as an estimate.

When it must be paid

The employer must pay end-of-service dues within 14 days of the employment ending.

If it is not paid

1. Ask in writing. Set out your dates of service, your basic wage and the amount you calculate.
2. Keep evidence. Contract, payslips, bank statements and your termination or resignation letter.
3. File a complaint with the Ministry of Human Resources and Emiratisation (MOHRE). If it is not settled there, the matter can be referred to the labour courts.

Time limits apply to labour claims, so do not wait.

Next step

If your gratuity has been calculated differently from what you expected, or you are negotiating an exit, a legal consultation can tell you where you stand before you sign anything.

This article is general information, not legal advice. Laws and procedures change and differ between emirates and between the mainland and free zones; take advice on your own circumstances before acting.