Here is how to calculate gratuity in the UAE: take your last basic salary, divide it by 30 to get a daily wage, then pay 21 days of that wage for each of your first five years of service and 30 days for every year after that. The total is capped at two years' basic salary, and you must complete at least one full year to qualify. Since February 2022 you receive the full amount whether you resign or are terminated. In practice that works out to 0.7 months of basic salary per year for the first five years and one month per year after that.
The rest of this guide walks through the computation step by step, with a ready-made table for 1 to 25 years of service, three worked examples and the law behind each rule: UAE Federal Decree-Law No. 33 of 2021, Article 51. You can run your own figures in the calculator below, or open the full UAE gratuity calculator for a year-by-year breakdown and a PDF.
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UAE End-of-Service Gratuity Calculator
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UAE Federal Decree-Law No. 33 of 2021, Article 51
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How to calculate gratuity in the UAE, step by step
Once you separate basic salary from your allowances, the formula is simple, whether you call it calculating or computing gratuity. Here is how to compute gratuity in the UAE with the exact method the calculator above uses, the same one your employer and MOHRE apply.
- Start with your basic salary. Use your monthly basic wage only. Housing, transport and other allowances are not part of the gratuity base.
- Find your daily wage. Divide the monthly basic salary by 30. This daily figure is what every gratuity day is worth.
- Pay 21 days per year for the first five years. For each of your first five years, you earn 21 × your daily wage.
- Pay 30 days per year from year six onward. Every year beyond the fifth is worth 30 × your daily wage.
- Prorate the final part-year. An incomplete last year is paid in proportion to the days worked, and any unpaid-leave days are stripped out of your service period first.
- Apply the two-year cap. The final total can never exceed 24 months' basic salary, however long you served.
| Service period | Gratuity earned per year |
|---|---|
| First 1–5 years | 21 days' basic pay |
| 6th year onward | 30 days' basic pay |
| Overall cap | 2 years' (24 months') basic pay |
The two things people most often get wrong are the wage base and the cap: gratuity is built on basic salary, not gross, and it is hard-capped no matter how senior you become. Everything else is arithmetic.
Gratuity for 1, 2, 5 and 10 years: the quick table
Because every gratuity day is worth one-thirtieth of your basic salary, the whole entitlement can be written as months of basic salary. That makes a single table work for any salary: multiply the middle column by your monthly basic.
| Completed years of service | Gratuity in months of basic salary | On a basic salary of AED 10,000 |
|---|---|---|
| 1 year | 0.7 | AED 7,000 |
| 2 years | 1.4 | AED 14,000 |
| 3 years | 2.1 | AED 21,000 |
| 5 years | 3.5 | AED 35,000 |
| 10 years | 8.5 | AED 85,000 |
| 15 years | 13.5 | AED 135,000 |
| 20 years | 18.5 | AED 185,000 |
| 25 years | 23.5 | AED 235,000 |
| 26 years or more | 24 (the cap) | AED 240,000 |
How to calculate gratuity in the UAE for 2 years: 2 × 21 = 42 days, which is 1.4 months of basic salary. On a basic of AED 8,000 that is 1.4 × 8,000 = AED 11,200; on AED 15,000 it is AED 21,000. The jump between 5 and 10 years is bigger than the first five years combined (3.5 months, then another 5 months), because every year after the fifth earns 30 days instead of 21.
For a part-year, take the row below your service and add the extra days at that year's rate. Service from 1 January 2023 to 2 July 2025 on AED 10,000 is two full years plus 182 days: AED 14,000 + (182 ÷ 365 × 21 days × AED 333.33) = AED 14,000 + AED 3,490.41 = AED 17,490.41, which is what the calculator shows for those dates. Every figure in the table matches the calculator for the same inputs.
Worked examples: the computation for gratuity in the UAE
The table covers whole years. These examples show the arithmetic behind it, and each one reconciles exactly with the calculator: plug in the same inputs and you will see the same result.
Example 1: resigned after 3 years (basic AED 10,000)
- Daily wage = 10,000 ÷ 30 = AED 333.33
- 21 days × 3 years = 63 days
- 63 × 333.33 = AED 21,000
Because this employee resigned rather than being terminated, the old law would once have cut the payout. Since February 2022 it does not: the full AED 21,000 is due.
Example 2: terminated after 8 years (basic AED 15,000)
- Daily wage = 15,000 ÷ 30 = AED 500
- First 5 years: 21 × 5 = 105 days
- Years 6 to 8: 30 × 3 = 90 days
- Total 195 days × 500 = AED 97,500
This is where the rate step matters: the first five years accrue more slowly (21 days) than the years after (30 days), so long service is worth proportionally more, until the cap steps in.
Example 3: 26 years of service, where the cap bites (basic AED 20,000)
- Daily wage = 20,000 ÷ 30 = AED 666.67
- First 5 years: 105 days. Years 6 to 26: 30 × 21 = 630 days. Total = 735 days
- 735 × 666.67 = AED 490,000 (uncapped)
- But the cap is 24 × 20,000 = AED 480,000
So this employee is paid AED 480,000, not AED 490,000. The last part of their service is effectively unpaid because of the ceiling.
A cap insight most guides miss: because your payout and the cap both scale with the same basic salary, the two-year cap only starts to bite at roughly 25½ years of service, regardless of how high your salary is. Below that length, no UAE salary hits the ceiling.
How to calculate gratuity in Dubai and Abu Dhabi
Exactly the same way. Gratuity is set by a federal law, so a mainland employee in Dubai, Abu Dhabi, Sharjah or any other emirate uses the same 21-day and 30-day rates, the same basic-salary base and the same two-year cap. There is no separate Dubai or Abu Dhabi formula, and the table above applies in every emirate.
The exceptions are the two financial free zones. The DIFC (which uses the DEWS savings plan) and ADGM run their own employment laws and end-of-service schemes, so a figure worked out here will not match them. If you work in another free zone, check your free-zone authority's employment regulations before relying on the mainland figure.
Do you lose gratuity if you resign in the UAE?
No. This is the single most out-of-date claim still circulating online, so it is worth stating plainly: resigning does not reduce your gratuity. Once you have completed one year, resignation and termination pay the same amount.
The confusion comes from the old law. Before Federal Decree-Law No. 33 of 2021 took effect on 2 February 2022, an employee on an unlimited contract who resigned before five years received only a fraction of their gratuity: one-third for 1 to 3 years and two-thirds for 3 to 5 years.
Here is the same 4-year employee (basic AED 12,000; 84 days = AED 33,600 in full) under both systems:
| How employment ended | Old law (unlimited contract, pre-2022) | Current law (since Feb 2022) |
|---|---|---|
| Terminated by employer | AED 33,600 (full) | AED 33,600 (full) |
| Resigned | AED 22,400 (two-thirds) | AED 33,600 (full) |
If an employer still applies the old reduction to a resignation today, that deduction is not lawful, and you can raise it with the Ministry of Human Resources and Emiratisation (MOHRE) before going to the labour court. Dismissal for misconduct does not remove gratuity under the current law either: that was a 1980-law rule, and Article 44 of the 2021 law says nothing about gratuity.
Unlimited contracts: the pre-2022 rule and today
If you are searching for how to calculate gratuity in the UAE for an unlimited contract, the answer is that you calculate it exactly as above. The 2021 law abolished the limited/unlimited distinction, made every contract fixed-term, and gave employers until 31 December 2023 (an extended deadline) to convert the remaining unlimited contracts. No current employee is still on the old unlimited-contract rules.
The only time the old fractions matter is when someone's employment ended before 2 February 2022 and their payout is still being disputed. For the full timeline, see the 2022 gratuity law change and what Article 51 says clause by clause.
Part-years, unpaid leave, and salary changes
Real service rarely lands on a whole number of years, so three adjustments are worth understanding:
- Part-years are prorated. The final incomplete year is paid as
days in that year ÷ 365 × the year's rate (21 or 30) × daily wage. The calculator counts your service to the exact day, so a few extra weeks still add to your total. - Unpaid leave is removed. Days of unpaid leave are subtracted from your service period before the years are counted, so they do not accrue gratuity.
- Your last basic salary is used. If your basic pay rose over the years, the whole calculation runs on your final basic salary, not an average.
Gratuity is only one line of your final settlement. The full amount your employer owes also includes payment for any unused annual leave and, where relevant, unpaid wages or overtime. You can estimate those with the UAE leave salary calculator and the UAE overtime calculator.
Common mistakes to avoid
- Using gross salary instead of basic. Including allowances inflates the result; gratuity is on basic pay only.
- Forgetting the two-year cap. However long you served, the total stops at 24 months' basic salary.
- Assuming resignation cuts your payout. That was the pre-2022 rule and no longer applies.
- Counting unpaid leave as service. Those days are excluded before the calculation runs.
- Expecting gratuity under one year. Nothing is due before one full year of continuous service.
- Applying mainland rules inside a financial free zone. DIFC (which uses the DEWS savings plan) and ADGM run their own end-of-service schemes, so your figure there may differ.
Frequently Asked Questions
What is the formula for gratuity in the UAE?
Gratuity is 21 days of basic salary for each of your first five years of service, plus 30 days of basic salary for every year after that. The daily wage is your monthly basic salary divided by 30, and the total is capped at two years' basic pay. This is set by Federal Decree-Law No. 33 of 2021, Article 51.
How much gratuity do I get for 2 years in the UAE?
42 days of basic salary, which is 1.4 months' basic. On a basic salary of AED 10,000 that is AED 14,000, and on AED 8,000 it is AED 11,200. You get the same amount whether you resign or are terminated.
Is UAE gratuity calculated on basic salary or gross salary?
Basic salary only. Allowances such as housing, transport and utilities are excluded, so gratuity is almost always lower than a figure based on your total package.
Do I still get full gratuity if I resign in the UAE?
Yes. Since February 2022, resignation no longer reduces your gratuity. As long as you have completed one year of service, resigning and being terminated pay exactly the same amount. Any deduction for resigning before five years is based on the old, repealed law.
How do I check my gratuity in the UAE?
Take your basic salary from your contract or payslip, count your service from your start date to your last working day minus any unpaid leave, then apply 21 days per year for the first five years and 30 days per year after that, within the two-year cap. Compare the result with the gratuity line in your final settlement. If they differ, ask HR how they reached their figure before escalating to MOHRE.
How do I find my basic salary for the gratuity calculation?
Your employment contract and payslip show basic salary as a separate line from allowances such as housing and transport. Gratuity uses only that basic figure. If your documents show only a total package, ask HR for the breakdown, because the gratuity amount depends on it.
What is the maximum gratuity you can receive in the UAE?
Your total gratuity cannot exceed two years' (24 months') basic salary, no matter how long you served. Because both the payout and the cap scale with your basic salary, the cap only starts to apply at around 25 and a half years of service.
How is a partial year of service counted?
The final incomplete year is paid in proportion to the days worked: the days in that year divided by 365, multiplied by the rate for that year (21 or 30 days) and your daily wage. The calculator above counts your service to the exact day.
Before you finalise your settlement
Calculating gratuity in the UAE really does come down to four numbers: your basic salary, your daily wage, your years of service and the two-year cap. Get those right and you can check your employer's figure to the dirham. Gratuity is only one line of the final settlement, and what goes into a UAE final settlement walks through leave, notice pay and unpaid wages as well. When you are ready, run your exact dates and salary through the UAE gratuity calculator for an instant breakdown, or read how we verify every formula against the official law.
Sources: UAE Government: employment laws and regulations in the private sector (Federal Decree-Law No. 33 of 2021) · UAE Government: end-of-service benefits for employees in the private sector. This guide is an estimate for general guidance, not legal advice. Confirm your figure with your employer, MOHRE or a qualified lawyer before acting.