End-of-Service Gratuity in the UAE: What You're Actually Owed

End-of-service gratuity is a statutory entitlement under Article 51 of Federal Decree-Law No. 33 of 2021, the UAE Labour Law governing the private sector. It cannot be waived by contract.

Most people know it exists. Rather fewer can calculate it, and a persistent myth still costs people confidence when deciding whether to move jobs.

How it's calculated

You need at least one year of continuous service. Below twelve months, there's no entitlement.

Then: 21 days' basic wage for each of the first five years, and 30 days' basic wage for each year beyond five. The daily rate is your monthly basic salary divided by 30. The total is capped at two years' wage.

So on a basic salary of AED 12,000 across ten years: five years at 21 days gives 105 days, five years at 30 days gives 150 days, totalling 255 days. At a daily rate of AED 400, that's AED 102,000.

The word doing the heavy lifting is 'basic'

This is where expectations and reality diverge most sharply. Gratuity is calculated on basic salary as stated in your registered contract — not your total package.

Housing allowance, transport allowance, utilities, bonuses, commission and overtime are all excluded.

If your package is structured with a modest basic and large allowances — which is extremely common in the UAE — your gratuity will be far smaller than your gross salary implies. Worth checking your contract now rather than at exit.

The myth: resigning cuts your gratuity

Under the old law, employees resigning before five years under unlimited contracts faced reductions of a third to two-thirds. That was repealed in 2021.

Under the current law, resignation and termination produce the same calculation. The limited/unlimited contract distinction was abolished; all contracts are now fixed-term. If you've completed a year and served your notice properly, you receive the full amount.

Gross misconduct remains a ground for forfeiture, and unpaid leave doesn't count toward service.

Exceptions worth knowing

DIFC operates the DEWS savings scheme rather than gratuity. ADGM has its own arrangements. UAE nationals accrue pension entitlement through GPSSA instead. And a voluntary savings-scheme alternative to gratuity now exists for some employers.

Keep your contract, payslips and salary-deposit records — StatementOrganizer.com can organise the banking side.

References

• UAE end-of-service gratuity: full calculation guide — UAE Expert Hub
• UAE gratuity and end-of-service benefits — QuickTax
• UAE gratuity calculator and Article 51 rules — EGSH
• UAE gratuity calculator — The National

This article is for general information only and is not legal or financial advice. It describes UAE private-sector rules under Federal Decree-Law No. 33 of 2021; DIFC, ADGM, free zones and public-sector employees may be subject to different regimes, and UAE nationals fall under separate pension arrangements. Calculations shown are illustrative. Consult MoHRE or a qualified employment lawyer about your entitlement.