UAE End of Service Gratuity Explained: Formula, Examples and Rules
End of service gratuity is a lump sum the UAE employer pays when an employee's job ends after a qualifying period. Many workers are unsure how it is calculated or what counts as salary. This guide explains the formula, eligibility, worked examples and common mistakes in simple language, so you can estimate your own gratuity with confidence. For a quick estimate use our free UAE gratuity calculator. This is general information, not legal advice.
Who Is Eligible For Gratuity?
Employees in the UAE private sector who complete at least one year of continuous service are generally entitled to end of service gratuity. The rules below follow the UAE federal labour law that applies to most mainland private-sector employers.
The Gratuity Formula
- Daily wage = Basic monthly salary / 30
- First 5 years: 21 days of basic wage for each year
- After 5 years: 30 days of basic wage for each additional year
- Maximum: total gratuity cannot exceed two years of basic wage
- Part of a year is counted proportionally.
Example Calculations (Basic Salary AED 5,000)
| Service | Calculation | Gratuity |
|---|---|---|
| 1 year | 1 x 21 days x 166.67 | AED 3,500 |
| 3 years | 3 x 21 x 166.67 | AED 10,500 |
| 5 years | 5 x 21 x 166.67 | AED 17,500 |
| 8 years | 17,500 + 3 x 30 x 166.67 | AED 32,500 |
| 10 years | 17,500 + 5 x 30 x 166.67 | AED 42,500 |
The daily wage here is 5,000 / 30 = 166.67 AED. With a basic salary of 5,000 AED the two-year cap is 120,000 AED, so these examples are well below it.
Basic Salary vs Total Salary
Gratuity is calculated on your basic salary only. Allowances such as housing, transport, phone or bonuses are normally not included. Check your contract to see how your pay is split, because a low basic and high allowances will give a lower gratuity.
Unpaid Leave And Other Deductions
- Periods of unpaid leave are normally excluded from the service period.
- Money you owe the employer, such as an outstanding loan, may be deducted from your final settlement.
- Your notice period and any agreed deductions should be clear in your contract.
Free Zones And Special Cases
Some free zones, such as DIFC and ADGM, have their own employment rules and may use savings-scheme style arrangements instead. Domestic workers and government employees also follow different rules. Always confirm with your employer, HR or the Ministry of Human Resources and Emiratisation (MOHRE).
How To Claim Your Gratuity
- Keep your contract, last payslips and joining and leaving dates.
- Ask HR for a written final settlement statement.
- Check the basic salary and service period used in the calculation.
- If there is a dispute, contact MOHRE for help.
Frequently Asked Questions (FAQs)
How is UAE gratuity calculated?
21 days of basic wage for each of the first five years and 30 days for each year after, capped at two years of basic wage.
Do I need to complete one year to get gratuity?
Yes, at least one year of continuous service is generally required.
Is gratuity based on basic or total salary?
It is based on basic salary, not allowances.
What is the maximum gratuity?
Two years of the employee's basic wage.
Does unpaid leave affect gratuity?
Unpaid leave days are normally excluded from the service period.
Is the rule the same in DIFC and ADGM?
Not always. Free zones can have their own rules, so confirm with your employer or the relevant authority.