End-of-Service Gratuity Calculator and Rules in UAE (2026)

Every UAE employee earns gratuity. End-of-service gratuity is the lump-sum payment every private-sector worker in the UAE receives upon leaving their job, mandated by Federal Decree-Law No. 33 of 2021. It is not a bonus or a gift — it is a legal entitlement calculated on your basic salary and years of service.

This guide covers the exact formula, worked examples, resignation versus termination rules, free-zone exceptions, and what to do when your employer refuses to pay. For tailored advice on your situation, consult an experienced labor lawyer in the UAE.

What Is End-of-Service Gratuity in UAE Law?

End-of-service gratuity is a statutory severance payment owed to every private-sector employee who completes at least one year of continuous service. It is governed by Articles 51-53 of Federal Decree-Law No. 33 of 2021, calculated on basic salary only, and capped at two years' total basic salary.

Gratuity replaced the pension system for expatriate workers in the UAE. Unlike pensions, it is paid as a single lump sum when employment ends — regardless of the reason for termination. UAE and GCC nationals enrolled in their respective social security schemes are exempt from the gratuity system, as their pension contributions serve the same purpose.

Key characteristics:

• Applies to all private-sector employees on UAE mainland, including part-time workers (prorated).
• Calculated on basic salary only — housing, transport, commission, and other allowances are excluded.
• Minimum qualifying period: one full year of continuous service.
• Maximum total payout: two years' basic salary, regardless of how many years you have worked.
• Must be paid within 14 days of the employment relationship ending.

How Is Gratuity Calculated Step by Step?

The formula is 21 days of basic salary per year for the first five years, then 30 days per year for every year beyond five. Divide monthly basic salary by 30 to get the daily rate, multiply by the applicable days, and cap the total at two years' basic salary.

The calculation follows two tiers:

• Years 1-5: 21 days of basic salary per year of service
• Years 6+: 30 days of basic salary per year of service

Daily rate = Monthly basic salary / 30

Gratuity = (Daily rate x 21 x years up to 5) + (Daily rate x 30 x years beyond 5)

Partial years are calculated proportionally. If you worked 3 years and 7 months, your gratuity covers 3 years plus 7/12 of the next year's entitlement.

Worked Examples Table

The following table shows gratuity amounts at different service lengths for an employee earning AED 10,000 basic monthly salary (daily rate: AED 333.33):

Note on the cap: For the AED 10,000 basic salary example, two years' basic salary equals AED 240,000. The 20-year scenario (AED 185,000) stays under the cap. An employee would need approximately 27+ years of service before the cap applies at this salary level.

Does Gratuity Change if You Resign Versus Get Terminated?

Under the 2021 law, gratuity is the same whether you resign or are terminated. The old law's deductions for voluntary resignation — which reduced gratuity to one-third or two-thirds depending on service length — were abolished when the new decree took effect on 2 February 2022.

This is one of the most significant changes in the 2021 law. Here is a comparison:

The only situation where gratuity is forfeited entirely is termination under Article 44 — the gross-misconduct provisions. These include fraud, impersonation, criminal conviction, assault on the employer, and deliberate disclosure of trade secrets.

Common confusion: Many employees and even some HR departments still apply the old deduction rules. If your final settlement shows a reduced gratuity based on the old formula, this is incorrect under the current law and you have grounds to dispute it.

What Deductions Can Your Employer Make From Gratuity?

Employers can deduct proven debts the employee owes to the company — such as loans, salary advances, or damage to company property — from the gratuity payout. However, deductions must be documented, agreed upon, and cannot reduce the gratuity below zero.

Lawful deductions include:

• Outstanding salary advances or loans — if documented in writing and acknowledged by the employee.
• Property damage — only if caused by the employee's negligence or intentional act, and the employer can prove the cost.
• Housing or car loan balances — if the employment contract includes a repayment clause tied to end-of-service.
• Training cost recovery — if the contract includes a training bond and the employee leaves before the bond period expires. Courts typically cap these at reasonable amounts.

Deductions that are not lawful:

• Arbitrary penalties or fines not documented in company policy.
• Recovery of recruitment costs (visa fees, medical tests, Emirates ID) — these are the employer's obligation.
• Withholding gratuity as leverage for signing a waiver or release.

If your employer claims deductions you disagree with, request an itemized breakdown in writing before accepting the final settlement.

What Is the MOHRE Complaint Process for Unpaid Gratuity?

File a complaint through the MOHRE app, website, or by calling 600 590 000. MOHRE mediates within 14 days. If mediation fails, the case goes to labor court where employees with claims under AED 100,000 are exempt from court fees.

Step-by-step process for recovering unpaid gratuity:

1. Calculate your entitlement — use the formula above and confirm your basic salary from your contract and WPS records.
2. Request payment in writing — send a formal email or letter to your employer's HR department. Keep a copy.
3. Wait 14 days — the law requires employers to settle all dues within 14 days of the last working day.
4. File with MOHRE — if unpaid after 14 days, submit a complaint via the MOHRE mobile app (easiest method), the ministry's website, or in person at any Tasheel service center.
5. Mediation — a MOHRE mediator contacts both parties and attempts resolution within 14 working days.
6. Labor court referral — if mediation fails, MOHRE automatically refers the case to the labor court.
7. Court judgment — labor courts typically resolve straightforward gratuity claims within 2-3 months.

Evidence to gather before filing:

• Employment contract (with salary details)
• Final salary certificate or termination letter
• WPS salary transfer records (request from your bank)
• Any written communication about the dispute
• Calculation showing the amount owed

Employer not paying your gratuity? Find a labor lawyer on FindLawyer to file a complaint. Find a Labor Lawyer in Dubai →

How Does Gratuity Work in DIFC and ADGM Free Zones?

DIFC and ADGM have their own employment laws with different gratuity formulas. DIFC uses a stepped formula based on basic daily wage and caps gratuity differently. ADGM follows its own Employment Regulations 2019. Other free zones generally follow the federal law.

The two financial free zones operate under independent legal frameworks:

DIFC Gratuity Rules

DIFC Employment Law No. 2 of 2019 applies to all DIFC-registered employers. The gratuity formula:

While the per-year formula appears identical to federal law, DIFC has notable differences:

• Disputes go to DIFC Courts, not MOHRE or mainland labor courts.
• The DIFC introduced its own DEWS (DIFC Employee Workplace Savings) scheme in 2020, which employers can use as an alternative to traditional gratuity.
• No separate complaint mediation — employees file directly with the DIFC Small Claims Tribunal (claims under USD 500,000) or Court of First Instance.

ADGM Gratuity Rules

ADGM Employment Regulations 2019 set their own gratuity structure:

• Calculated on basic wage with a similar tiered approach.
• Disputes are handled by the ADGM Courts.
• ADGM has explored its own savings-scheme alternatives.

Other Free Zones

Free zones such as JAFZA, DAFZA, DMCC, RAKEZ, and SAIF Zone generally follow Federal Decree-Law No. 33 of 2021 for employment matters. MOHRE handles complaints for employees in these zones. Some zones have supplementary rules, but the core gratuity calculation remains the same.

If you work in a free zone, check your employment contract for the governing law clause. This determines which gratuity formula and dispute forum applies to you.

What Is the DEWS Savings Scheme Alternative?

DEWS (DIFC Employee Workplace Savings) is a defined-contribution savings plan that replaces traditional gratuity for DIFC employers. Employers contribute a percentage of basic salary monthly into an investment fund managed by the employee. Mainland employers can opt into similar schemes under Cabinet Decision No. 96 of 2023.

The UAE government has been moving toward a funded savings model to address a longstanding problem: traditional gratuity is an unfunded liability, meaning the employer must have the cash available at termination. Many companies — especially those facing financial difficulty — struggle to pay.

How DEWS Works (DIFC)

• Employer contributes 5.83% of basic salary monthly (for employees under 5 years) or 8.33% (for those over 5 years) into a trust-managed investment fund.
• Employees choose from several risk-return profiles (conservative, balanced, aggressive).
• Upon termination, the employee receives the accumulated contributions plus investment returns.
• The fund is managed by an independent trustee, protecting employee money from employer insolvency.

Mainland Alternative Savings Scheme

Cabinet Decision No. 96 of 2023 introduced a voluntary alternative to gratuity for mainland employers:

• Employers can opt to make monthly contributions to an approved investment fund instead of accumulating a gratuity liability.
• Employees may make additional voluntary contributions.
• The scheme is administered by approved fund managers.
• If the employer does not opt in, the traditional gratuity system applies by default.

This system is still in early adoption. Most mainland employers continue under the traditional gratuity model. Confirm with your employer which system applies to you.

What Happens to Gratuity if You Are on a Part-Time Contract?

Part-time employees are entitled to prorated gratuity based on the number of working hours relative to a full-time position. The calculation uses the same 21/30-day formula, scaled by the ratio of actual hours worked to standard full-time hours.

Under Federal Decree-Law No. 33 of 2021, part-time work is a recognized contract type with explicit protections. For gratuity:

• Determine the employee's average weekly working hours.
• Divide by the standard full-time hours (48 hours/week).
• Apply this ratio to the standard gratuity formula.

Example: An employee works 24 hours per week on a part-time contract with a basic monthly salary of AED 5,000 for 6 years.

• Ratio: 24/48 = 0.5
• Full-time gratuity would be: (5,000/30) x [(21 x 5) + (30 x 1)] = AED 22,500
• Part-time gratuity: AED 22,500 x 0.5 = AED 11,250

Part-time employees who work for multiple employers accrue separate gratuity entitlements from each employer.

What Are Common Employer Violations Around Gratuity?

The most frequent violations are non-payment or delayed payment, calculating on total salary instead of basic, applying the old resignation deductions, and pressuring employees to sign waivers. All of these are actionable through MOHRE complaints.

Common issues employees face:

If you encounter any of these situations, document everything in writing before filing a complaint. Written evidence — emails, WhatsApp messages, salary slips — is decisive in MOHRE mediations and labor court.

Frequently Asked Questions

Do I get gratuity if I am terminated during probation?

No. Probation periods can last up to 6 months under the new law, and gratuity requires a minimum of one year of continuous service. However, if your probation is extended beyond the legal limit or you are not formally on probation, you may have a claim.

Is gratuity taxable in the UAE?

No. The UAE does not levy personal income tax. Your gratuity payout is received in full without any tax deductions. If you are a tax resident of another country, consult a tax advisor about reporting obligations in your home jurisdiction.

Can I negotiate a higher gratuity in my contract?

Yes. The law sets a minimum — employers can offer more generous terms. Some senior-level contracts include enhanced severance packages that exceed the statutory formula. Whatever is written in the contract applies, provided it meets or exceeds the legal minimum.

What if my employer goes bankrupt before paying gratuity?

Employee dues, including gratuity, are treated as priority claims in insolvency proceedings under Federal Decree-Law No. 51 of 2023 (Insolvency Law). This means employees are paid before most other creditors. File your claim with the insolvency administrator and with MOHRE simultaneously.

Does maternity leave count toward gratuity calculation?

Yes. Maternity leave is considered continuous service and counts toward your gratuity calculation. The same applies to sick leave and annual leave. Only genuinely unpaid leave — where the employee has no entitlement to pay — is excluded.

Can my employer pay gratuity in installments?

The law requires payment within 14 days as a lump sum. Installment arrangements are not provided for in the statute. If your employer proposes installments, insist on the full amount or file a complaint. If you agree to installments voluntarily, get the schedule in writing with specific dates and amounts.

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