UAE end-of-service gratuity explained: how it's calculated in 2026
How end-of-service gratuity works under the UAE Labour Law: 21 days' basic pay a year for five years, 30 days after, the two-year cap, resignation, unpaid leave, the 14-day payment deadline and worked examples.
- Written by
- Arnold Gold, Product Manager
- Published
- 13 October 2026
- Figures checked
- 12 October 2026
What end-of-service gratuity is
End-of-service gratuity is a lump sum the employer pays when a private-sector employment contract ends. In the UAE it takes the place of a workplace pension for foreign employees, so for many expats it is the largest single payment of their working life here.
The rules are in Federal Decree-Law No. 33 of 2021 on the regulation of labour relations — Article 51 sets the entitlement and Article 53 the payment deadline (UAE Legislation). They apply to private-sector employers under the federal Labour Law, including most free zones. DIFC and ADGM have their own employment laws and end-of-service schemes, and UAE nationals are covered by the pension system instead.
The formula
- Eligibility: at least one year of continuous service. Under a year, no gratuity is due.
- Daily wage: your last monthly basic salary divided by 30. The law doesn't define the divisor; dividing by 30 is the convention MOHRE uses.
- First 5 years: 21 days' wage for each year.
- After 5 years: 30 days' wage for each further year.
- Part years count proportionally once you've completed a year, and days of unpaid leave are taken out of your service.
- Cap: the total can't exceed two years' wage.
In one line: gratuity = (basic ÷ 30) × (21 × years up to 5 + 30 × years beyond 5), capped at 24 months' basic.
Gratuity on AED 10,000 basic, by length of service
| Service | Gratuity | Months of basic |
|---|---|---|
| 1 year | AED 7,000 | 0.7 |
| 3 years | AED 21,000 | 2.1 |
| 5 years | AED 35,000 | 3.5 |
| 7 years | AED 55,000 | 5.5 |
| 10 years | AED 85,000 | 8.5 |
| 15 years | AED 135,000 | 13.5 |
| 20 years | AED 185,000 | 18.5 |
| 30 years | AED 240,000 (capped) | 24.0 |
The jump after year five is the higher 30-day rate starting. At that rate the two-year cap is only reached after 25.5 years of service, whatever the salary.
Worked examples
Seven years on AED 10,000 basic
Daily wage AED 10,000 ÷ 30 = AED 333. First five years: 5 × 21 × AED 333 = AED 35,000. The remaining 2 years: 2 × 30 × AED 333 = AED 20,000. Total: AED 55,000.
Three years with 60 days of unpaid leave
The unpaid days come off the service first, leaving 2.84 years. On AED 10,000 basic that gives AED 19,849, against AED 21,000 with no unpaid leave.
Why the basic share matters
Two people on the same AED 20,000 monthly package, both leaving after four years. One has an AED 10,000 basic; the other negotiated AED 12,000. Gratuity: AED 28,000 versus AED 33,600. Allowances don't count, so the split of your package decides the payout. The salary calculator shows your basic share and the gratuity your employer is building up for you each month.
Run your own dates in the gratuity calculator — it uses the same engine.
How gratuity builds up month by month
Although it's paid at the end, gratuity is earned as you work. On AED 10,000 basic, each month of service in the first 5 years adds about AED 583 to what you'll be owed; after year 5, each month adds about AED 833. That's why the fifth work anniversary is worth noting — the rate you earn it at rises by more than 40%.
Two practical consequences. First, the payout is based on your last basic salary, so a basic-salary rise late in your service lifts the value of all your earlier years too. Second, leaving a few weeks before you complete your first year means nothing is due at all — check your start date before choosing a leaving date.
The cap is 24 months' basic. Because 5 years at 21 days and the rest at 30 days add up to 24 months only after 25.5 years, the cap rarely applies in practice.
Resignation, dismissal and contract type
Under the 2021 law, a full-time foreign worker who has completed at least one year of continuous service is entitled to the gratuity calculated above whether they resign or are dismissed. The older reductions for resigning before five years no longer apply to private-sector contracts under the Labour Law.
What does change the figure is the length of continuous service (and any unpaid leave within it) and your last basic salary — so the date your contract actually ends, and any basic-salary change just before it, matter.
When it must be paid, and what to do if it isn't
Your employer must pay end-of-service dues within 14 days of the contract ending (Article 53), together with your final salary and other entitlements.
If the payment is late or lower than you expect, ask your employer for the calculation in writing and compare it with your own. If it still isn't resolved, you can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE).
UAE nationals: the pension instead
UAE nationals in the private sector don't receive gratuity under this formula; they are covered by the GPSSA pension scheme under Federal Decree-Law 57 of 2023 (UAE Legislation). Contributions are 11% from the employee and 15% from the employer on the contribution salary, with the government covering 2.5% of the employer's share below AED 20,000 a month.
Common mistakes
- Using the total package. Only basic salary counts.
- Forgetting unpaid leave. It reduces your counted service.
- Expecting gratuity in the first year. Nothing is due under one year of continuous service.
- Applying the wrong law. DIFC and ADGM have their own employment rules.
Frequently asked questions
Frequently asked questions
How is end-of-service gratuity calculated in the UAE?
On your last basic salary: 21 days' wage for each of the first 5 years and 30 days' for each year after, counting part years once you've completed one year, capped at two years' wage. On AED 10,000 basic, 7 years gives AED 55,000.
Do I get gratuity if I resign?
Yes. Under Federal Decree-Law 33 of 2021, a full-time foreign worker with at least one year of continuous service is entitled to the full gratuity whether they resign or are dismissed.
Do allowances count towards gratuity?
No — only basic salary. Housing, transport and other allowances are excluded.
Is there a maximum gratuity?
Yes, two years' wage. At 30 days a year after the fifth year, you reach that only after a long career.
Does unpaid leave affect gratuity?
Yes. Days of unpaid leave are taken out of your service before the calculation.
How quickly must my employer pay?
Within 14 days of the end of the contract. If it isn't paid, you can complain to MOHRE.
When does the two-year cap kick in?
After 25.5 years of service. Before that, the formula always gives less than two years' basic wage.
Do UAE nationals get gratuity?
UAE nationals in the private sector are covered by the GPSSA pension scheme instead of this gratuity formula.
Sources
Related guides
Not financial advice