The UAE gratuity law is Article 51 of Federal Decree-Law No. 33 of 2021, the federal Labour Law that has governed private-sector employment since 2 February 2022. It gives any expatriate employee who completes one year of continuous service a lump sum of 21 days of basic salary for each of the first five years and 30 days for every year after that, capped at two years' basic pay. You receive the full amount whether you resign or are terminated, and your employer must pay it within 14 days of the contract ending.
Much of what still ranks online describes the 1980 law that Article 51 replaced. This guide sets out every rule in the current law, reads Article 51 clause by clause, explains what the 2022 change means for old unlimited contracts, and covers Dubai, Abu Dhabi and the free zones. If you only want your number, the calculator below applies Article 51 for you.
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What is gratuity under UAE law?
In plain terms, the meaning of gratuity in the UAE is the one-off payment an employer owes you when your employment ends, in recognition of the years you worked. The law calls it the end-of-service gratuity. You will also see it called the end-of-service benefit (EOSB), EOS pay or, loosely, severance pay. It is not a pension and not a savings account. Unless your employer has enrolled you in the voluntary Savings Scheme covered below, it is simply a debt that falls due on your last day, worked out from your last basic salary and your length of service.
One law sets it. Federal Decree-Law No. 33 of 2021, the decree-law regulating employment relations in the private sector, replaced the old Federal Law No. 8 of 1980 and is administered by the Ministry of Human Resources and Emiratisation (MOHRE). It has since been amended (by Federal Decree-Law No. 20 of 2023, among others), but the Article 51 formula described here is the one in force today.
UAE gratuity rules at a glance
| Rule | What the law says |
|---|---|
| Minimum service | One full year of continuous service. Nothing is due below that |
| Wage base | Your last basic salary. Housing, transport and other allowances are excluded |
| Daily wage | Monthly basic salary ÷ 30 |
| Years 1 to 5 | 21 days' basic pay for each year |
| Year 6 onward | 30 days' basic pay for each year |
| Part-years | Paid in proportion to the days worked, once the first year is complete |
| Unpaid leave | Days of unpaid absence are not counted as service |
| Maximum | Two years' (24 months') basic salary |
| Resignation | Paid in full. The old resignation reduction ended on 2 February 2022 |
| Contract type | Irrelevant. The limited/unlimited distinction was abolished |
| Deductions | The employer may deduct amounts you owe it by law or under a court judgment |
| Payment deadline | All wages and entitlements, gratuity included, within 14 days of the contract ending |
Everything below expands on this table, starting with the article that contains most of it.
Article 51 of the UAE gratuity law, clause by clause
Most guides paraphrase the 21-and-30-day formula and stop. Article 51 sets out several distinct rules, and knowing each one is what lets you check an employer's figure to the dirham.
| What Article 51 establishes | In plain terms |
|---|---|
| Nationals | A UAE-national worker's end-of-service benefit follows the pensions and social-security legislation (the GPSSA scheme), not this formula. |
| Entitlement and accrual | A full-time expatriate worker with one year or more of continuous service earns 21 days' wage for each of the first five years and 30 days' wage for each year after. |
| Part-years | Once the first year is complete, an incomplete final year is paid pro rata, so service is counted to the day rather than rounded down. |
| What counts as service | Days of unpaid absence are excluded from the service period before the years are counted. |
| The ceiling | The total may not exceed two years' wage, however long the service. |
| Employer deductions | The employer may deduct amounts the worker owes it by law or under a court judgment before paying the balance. |
The wage in question is your last basic salary, the figure on your payslip before any allowance is added. Someone on AED 20,000 gross with a basic of AED 8,000 accrues gratuity on 8,000, which is the most common reason people over-estimate their entitlement. Because the last basic is used, a raise late in your career lifts the whole calculation, not just the final year.
Notice what is missing. There is no clause reducing the amount because an employee resigned, and no clause distinguishing "limited" from "unlimited" contracts. Both belonged to the 1980 law, and their absence is the single most important thing about Article 51.
How Article 51 turns into a number
The method is the same for everyone: take your last basic salary, divide by 30 for a daily wage, apply 21 days a year for the first five years and 30 days a year after that, then check the two-year cap.
Worked example: 4 years of service, basic salary AED 12,000, resigned.
- Daily wage = 12,000 ÷ 30 = AED 400
- 21 days × 4 years = 84 days
- 84 × AED 400 = AED 33,600, paid in full because resignation no longer reduces gratuity
The cap rarely matters in practice. On a basic of AED 12,000 it sits at AED 288,000, and because the payout and the cap rise with the same salary, the ceiling only starts to bite after roughly 25 years of service. Run your own dates through the UAE gratuity calculator for the year-by-year breakdown, or see the step-by-step guide with worked examples, which includes a table for 1 to 25 years of service.
Who is eligible for gratuity in the UAE, and who isn't
The main condition is one full year of continuous service with the same employer. Below a year nothing is due, including if you leave during probation. Probation still counts if you stay: those months form part of your continuous service.
Article 51's formula covers expatriate employees of private-sector companies registered with MOHRE. Three groups sit outside it:
- UAE and GCC nationals accrue end-of-service benefits through the pension and social-security system (the GPSSA for Emiratis) instead of employer-paid gratuity.
- Domestic workers are covered by a separate statute, Federal Decree-Law No. 9 of 2022, with its own end-of-service rules.
- Employees in the DIFC and ADGM fall under those financial free zones' own employment laws (more on this below).
If you are outside those groups and past your first year, Article 51 decides your amount.
The new gratuity law (2022): resignation and unlimited contracts
The gratuity calculation looks simple today because a lot of complexity was deleted in 2022. Conflicting advice online almost always comes from a page describing an earlier point on this timeline:
| When | What the law said about gratuity |
|---|---|
| Before 2 Feb 2022 (Federal Law 8/1980) | Two contract types. On an unlimited contract, resigning cut gratuity to one-third (1 to 3 years) or two-thirds (3 to 5 years). On a limited contract, resigning early could forfeit it. |
| 2 Feb 2022 (Decree-Law 33/2021, Art. 51) | The limited/unlimited split was abolished (all contracts became fixed-term) and the resignation reduction was removed. Full gratuity is due after one year however the job ends. |
| By 31 Dec 2023 (extended MOHRE deadline) | Employers had to move remaining staff onto fixed-term contracts, so no live employment relationship still runs on an old unlimited contract. |
| From late 2023 (voluntary Savings Scheme) | Employers may opt into an alternative system under Cabinet Resolution No. 96 of 2023, paying monthly contributions into licensed funds instead of accruing the Article 51 lump sum. |
Here is what the change means in money, for an employee with 2 years of service on a basic salary of AED 8,000 (42 days, or AED 11,200 in full):
| How employment ended | Old law (pre-Feb 2022, unlimited contract) | Current law |
|---|---|---|
| Terminated by employer | AED 11,200 (full) | AED 11,200 (full) |
| Resigned | AED 3,733 (cut to one-third) | AED 11,200 (full) |
The same logic applies to the 4-year example above: under the old law a resignation would have paid two-thirds, AED 22,400, instead of AED 33,600. If a calculator, an HR spreadsheet or an employer applies a one-third or two-thirds cut today, it is running a law that was repealed in February 2022.
Does misconduct still cost you your gratuity?
Under the current law, no clause takes gratuity away. The 1980 law did: its Article 139 removed gratuity from a worker dismissed for serious misconduct. Decree-Law 33/2021 has no equivalent. Article 44 still lets an employer dismiss without notice for listed misconduct (forged documents, serious losses caused by error, assault at work and so on), but it says nothing about gratuity. The only dismissal penalty in the disciplinary rules, Article 39, is dismissal "while reserving his right in getting the end of service gratuity". What an employer can do is deduct amounts you genuinely owe it. If your gratuity is withheld after a dismissal, that is a dispute to raise with MOHRE, ideally with legal advice.
Is gratuity law different in Dubai, Abu Dhabi or the free zones?
Not for the mainland. Decree-Law 33/2021 is federal, so Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah all apply the same Article 51. "Dubai gratuity law" is simply the federal statute as it applies in Dubai, and a mainland employee gets the same figure in any emirate.
Free zones need one more step. The UAE Government says free-zone employees are generally governed by their free-zone authority's employment regulations together with Decree-Law 33/2021, and that those regulations are typically aligned with the federal law. Two financial free zones are the real exceptions:
- DIFC runs its own employment law and replaced traditional gratuity with the DEWS funded savings plan.
- ADGM has its own employment regulations and end-of-service scheme.
If you work in another free zone (JAFZA or DMCC, for example), check your contract and your free-zone authority's regulations before relying on a mainland figure.
When gratuity must be paid: the 14-day rule
Your employer must pay all outstanding wages, other entitlements and gratuity within 14 days of the contract ending (Article 53). The final settlement usually includes more than gratuity: payment for unused annual leave, any notice pay owed, and unpaid wages or overtime. Estimate those with the UAE leave salary calculator and the UAE notice period calculator, and see what goes into a UAE final settlement for the whole picture.
If the 14 days pass and nothing arrives, the path is straightforward: raise it with the employer in writing, then file a complaint with MOHRE, which is free, before considering the labour court.
The Savings Scheme: the one system that can replace gratuity
Since late 2023, MOHRE has run a voluntary alternative end-of-service system, the Savings Scheme, under Cabinet Resolution No. 96 of 2023. An employer that joins pays a monthly contribution into a licensed investment fund instead of accruing the Article 51 lump sum:
| Service | Employer contribution |
|---|---|
| Under 5 years | 5.83% of monthly basic salary |
| More than 5 years | 8.33% of monthly basic salary |
Those rates mirror the gratuity formula (21 ÷ 30 ÷ 12 ≈ 5.83%, and 30 ÷ 30 ÷ 12 ≈ 8.33%). An employer that enrols you must still settle any gratuity you built up before enrolment, and when you leave you are entitled to the contributions plus any returns within 14 days. The word that matters is voluntary: unless your employer has actually enrolled you, the standard Article 51 rules apply unchanged. If you are not sure, ask HR, because contributions would appear as a fixed monthly percentage of your basic wage.
Frequently Asked Questions
What is the gratuity law in the UAE?
Article 51 of Federal Decree-Law No. 33 of 2021, the UAE Labour Law in force since 2 February 2022. After one year of continuous service, an expatriate 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, with unpaid-leave days excluded from the service period.
Does UAE law still reduce gratuity if you resign?
No. The resignation reduction belonged to the 1980 law and was abolished when Decree-Law 33/2021 took effect in February 2022. Once you have completed one year, you receive the same full gratuity whether you resign or are terminated. A calculator still applying a one-third or two-thirds cut is using a repealed law.
Is Dubai gratuity law different from the rest of the UAE?
No. Gratuity is set by a federal law, so Dubai, Abu Dhabi, Sharjah and every other emirate apply the same Article 51. The exceptions are the DIFC and ADGM financial free zones, which have their own employment laws and end-of-service schemes. Employees in other free zones should check their free-zone authority's regulations.
What happened to unlimited contracts under the new labour law?
They were abolished. Since February 2022 all UAE employment contracts are fixed-term, and employers had until 31 December 2023 (an extended deadline) to convert any remaining unlimited contracts. Gratuity no longer depends on contract type, so the old unlimited-contract rules no longer affect any current employee.
When must my employer pay my gratuity?
Within 14 days of the contract ending. Article 53 of Decree-Law 33/2021 requires all wages and end-of-service entitlements to be paid in that window. If it is not 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.
Can my employer refuse to pay gratuity?
The current law gives no ground for refusing it once you have a year of service. Article 44 allows dismissal without notice for misconduct but says nothing about gratuity, unlike the 1980 law's Article 139, which removed it. An employer may deduct amounts you owe it by law or under a court judgment. A refusal or unexplained deduction can be escalated to MOHRE.
What is the Savings Scheme for end-of-service benefits?
A voluntary alternative to Article 51 gratuity under Cabinet Resolution No. 96 of 2023. A participating employer pays 5.83% of monthly basic salary for employees with under five years' service and 8.33% after that into a licensed fund, and the employee receives the balance plus returns within 14 days of leaving. It only applies if your employer has enrolled you.
The bottom line
UAE gratuity law is unusually predictable: one article, one basic-salary base, two accrual rates, one cap, a 14-day payment deadline and, since 2022, no penalty for resigning. Knowing Article 51 clause by clause means you can read your own settlement the way MOHRE would. When you are ready to put a figure on it, the UAE gratuity calculator applies the statute exactly and shows the full breakdown, and you can read how we verify every formula against the official sources.
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 (Article 51 accrual, basic-wage basis, the two-year cap, unpaid-absence exclusion, deductions, the 14-day deadline and the Savings Scheme under Cabinet Resolution No. 96 of 2023) · UAE Government: laws applicable to free-zone employees. This guide is general information, not legal advice. Confirm your figure with your employer, MOHRE or a qualified lawyer before acting.