The gratuity rules in the UAE come down to five points: you qualify after one year of continuous service, the amount is built on your basic salary only, you earn 21 days' pay per year for the first five years and 30 days for every year after, the total is capped at two years' basic pay, and — since February 2022 — you receive the full amount whether you resign or are terminated. All of this sits in Federal Decree-Law No. 33 of 2021, Article 51, and your employer must settle it within 14 days of your last working day.
This guide goes through every rule one by one — including the ones most articles skip, like unpaid-leave deductions, the 14-day payment deadline, and the exclusions. If you just want your number, the calculator below applies all of these rules for you.
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The UAE gratuity rules at a glance
| Rule | What the law says |
|---|---|
| Minimum service | 1 full year of continuous service — nothing is due below that |
| Wage base | Last basic salary only; allowances excluded |
| Daily wage | Monthly basic salary ÷ 30 |
| Accrual rate | 21 days' pay per year (years 1–5), 30 days per year (year 6+) |
| Part-years | Prorated to the day, once the first year is complete |
| Unpaid leave | Days of unpaid absence don't count as service |
| Maximum | Capped at 2 years' (24 months') basic salary |
| Resignation | Paid in full — the old reduction was abolished in February 2022 |
| Deductions | An employer may deduct amounts you genuinely owe from the gratuity |
| Payment deadline | All entitlements due within 14 days of the contract ending (Article 53) |
| Forfeiture | Only lawful dismissal for gross misconduct (Article 44) can remove it |
Everything below expands on this table, in the same order an HR department would apply it.
Who is eligible for gratuity in the UAE — and who isn't
Eligibility for gratuity in the UAE has one main condition: one full year of continuous service with the same employer. Below a year, nothing is due — including if you leave during probation. Probation itself isn't wasted time, though: if you stay, those months count as part of your continuous service.
The rules in Article 51 cover full-time employees of mainland private-sector companies registered with the Ministry of Human Resources and Emiratisation (MOHRE). Four groups sit outside them:
- UAE and GCC nationals — covered by the GPSSA pension and social-security scheme instead of employer gratuity.
- DIFC and ADGM employees — the financial free zones run their own end-of-service schemes (the DIFC uses the DEWS savings plan), so mainland numbers won't match there.
- Domestic workers — covered by a separate law (Federal Decree-Law No. 9 of 2022) with its own end-of-service rules.
- Employees lawfully dismissed for gross misconduct under Article 44 — the one situation where entitlement can be lost entirely.
If you're outside those groups and past the one-year mark, the rules below decide your amount.
The wage-base rule: basic salary only
Gratuity is calculated on your last basic salary — the figure on your payslip before housing, transport, utilities, or any other allowance is added. Two practical consequences:
- Your gross package doesn't matter. An employee on AED 20,000 gross with a basic of AED 8,000 accrues gratuity on 8,000. This is the single most common reason people over-estimate their entitlement.
- Raises count in your favour. Because the last basic salary is used, the whole calculation runs on your final figure — not an average over the years.
One rule that surprises people: the law lets an employer deduct amounts you genuinely owe — an outstanding loan, for example — from the gratuity before paying it. A deduction for anything else, such as resigning, is not lawful.
The accrual-rate rules: 21 days, then 30
Service is rewarded at two rates, both counted in days of basic pay:
| Service period | Gratuity earned |
|---|---|
| First 1–5 years | 21 days' basic pay per year |
| 6th year onward | 30 days' basic pay per year |
Your daily wage is your monthly basic ÷ 30, and a final part-year is prorated to the day (days worked ÷ 365 × that year's rate). Here's the arithmetic on a mid-range example:
6 years of service, basic salary AED 9,000:
- Daily wage = 9,000 ÷ 30 = AED 300
- First 5 years: 21 × 5 = 105 days → 105 × 300 = AED 31,500
- Year 6: 30 days → 30 × 300 = AED 9,000
- Total gratuity = AED 40,500 — exactly 4.5 months of basic pay
Run your own dates through the UAE gratuity calculator and you'll see the same year-by-year breakdown, or read the step-by-step calculation guide if you want each step worked through in detail.
The two-year cap rule
However long you serve, total gratuity cannot exceed 24 months' basic salary. On a basic of AED 9,000 the ceiling is AED 216,000; on AED 20,000 it's AED 480,000. Because the payout and the cap both scale with the same salary, the cap only starts to matter after roughly 25 years of service — but when it does, every further year effectively adds nothing.
Resignation vs termination: the rule that changed in 2022
This is where most outdated advice still circulates. Under the old 1980 labour law, resigning from an unlimited contract before five years cut your gratuity — to one-third between years 1–3 and two-thirds between years 3–5. Federal Decree-Law No. 33 of 2021 abolished that reduction entirely when it took effect on 2 February 2022, and it removed the limited/unlimited contract distinction at the same time.
Here is what that means for an employee with 2 years of service on a basic salary of AED 8,000 (42 days = AED 11,200 in full):
| How employment ended | Old rules (pre-Feb 2022, unlimited contract) | Current rules |
|---|---|---|
| Terminated by employer | AED 11,200 (full) | AED 11,200 (full) |
| Resigned | AED 3,733 (reduced to ⅓) | AED 11,200 (full) |
If an employer, an HR sheet, or an online calculator still applies a resignation reduction today, it is using a repealed law. The full amount is due once you've completed one year — the only exception is lawful dismissal for gross misconduct under Article 44.
Unpaid leave, part-years, and the 14-day payment rule
Three rules control the fine print of your service period and payout:
- Unpaid leave doesn't accrue gratuity. Days of unpaid absence are removed from your service period before the years are counted — a rule stated explicitly in the official UAE government guidance.
- Part-years are paid proportionally. Once you've passed one year, a final incomplete year still earns gratuity for the exact days worked.
- Payment is due within 14 days. Article 53 requires the employer to pay all wages and entitlements — gratuity included — within 14 days of the contract's end date.
If the 14 days pass and your settlement hasn't arrived, the escalation path is straightforward: raise it with the employer in writing, then file a complaint with MOHRE (free of charge) before considering the labour court. Keep in mind gratuity is only one line of the final settlement — unused annual leave is paid out too, and notice pay may apply. You can estimate those with the UAE leave salary calculator and the UAE notice period calculator.
The Savings Scheme: the one rule that can replace gratuity
Since late 2023, MOHRE has run a voluntary alternative end-of-service system — the Savings Scheme — under which an employer can opt to pay monthly contributions into licensed investment funds instead of accruing the traditional lump sum. For the period an employee is enrolled, the invested balance (plus returns) replaces Article 51 gratuity.
The key word is voluntary: unless your employer has actively enrolled you, the standard rules in this guide apply unchanged. If you're not sure, ask HR — enrolment requires your employer to have registered with the scheme, and contributions appear as a defined monthly percentage of your wage.
Are gratuity rules different in Dubai or Abu Dhabi?
No. The gratuity rule in Dubai is the same as in Abu Dhabi, Sharjah, and every other emirate, because Federal Decree-Law No. 33 of 2021 applies federally. The only genuine geographic exceptions are the two financial free zones — DIFC and ADGM — which operate their own end-of-service schemes. If you work for a mainland company anywhere in the UAE, one set of rules applies.
Frequently Asked Questions
What are the current gratuity rules in the UAE?
After one year of continuous service, a private-sector employee earns 21 days of basic salary per year for the first five years and 30 days per year after that, capped at two years' basic pay. The calculation uses basic salary only, unpaid-leave days are excluded, and resignation no longer reduces the amount. The rules are set by Federal Decree-Law No. 33 of 2021, Article 51.
When must my employer pay my gratuity?
Within 14 days of the contract's end date. Article 53 of Federal Decree-Law No. 33 of 2021 requires all wages and end-of-service entitlements to be settled in that window. If it isn't paid, you can file a free complaint with MOHRE.
Is gratuity taxable in the UAE?
No. The UAE has no personal income tax, so end-of-service gratuity is paid to you in full, with nothing withheld.
Are the gratuity rules different in Dubai?
No — the rules are federal, so Dubai, Abu Dhabi, and all other emirates follow the same law. The exceptions are the DIFC and ADGM financial free zones, which run their own end-of-service schemes.
Does unpaid leave count toward gratuity?
No. Days of unpaid absence are excluded from your service period before gratuity is calculated, so a long stretch of unpaid leave reduces both your service length and your payout.
Can my employer refuse to pay gratuity?
Only in narrow cases. Entitlement can be lost through lawful dismissal for gross misconduct under Article 44, and an employer may deduct amounts you genuinely owe. Anything else — including refusing because you resigned — is not lawful, and you can escalate to MOHRE.
Do part years of service count?
Yes, once you have completed the first full year. After that, an incomplete final year is paid in proportion to the days worked, at that year's rate of 21 or 30 days.
Check your settlement against the rules
Each rule here is mechanical — which means you can verify your employer's figure to the dirham. Confirm your basic salary, count your service (minus unpaid leave), apply 21/30 days, check the cap, and expect payment within 14 days. The fastest way to do all of that at once is the UAE gratuity calculator, which applies Article 51 exactly and shows the full breakdown. If you want to see how we keep these rules current, read how we verify every formula.
Sources: UAE Federal Decree-Law No. 33 of 2021 — private-sector employment law · UAE Government — end-of-service benefits for private-sector employees (covers the 14-day deadline, unpaid-absence rule, deductions, and the Savings Scheme). This guide is an estimate for general guidance, not legal advice — confirm your figure with your employer, MOHRE, or a qualified lawyer before acting.