UAE Gratuity Calculator

Who qualifies for gratuity

Any private-sector employee who completes at least one full year of continuous service qualifies for end-of-service gratuity. The one-year threshold is a hard cutoff under Federal Decree-Law No. 33 of 2021, Article 51: an employee who works 11 months and 29 days receives nothing. The law applies equally regardless of nationality, salary level, or seniority — a junior technician and a senior manager follow the same formula.

Workers in the public sector, domestic workers, and some free-zone employees covered by separate regulations may have different rules. This calculator covers private-sector workers governed by the main UAE federal labour law.

The 21-day and 30-day formula, explained simply

The calculation starts with your daily wage: monthly basic salary ÷ 30. This divisor is fixed under UAE labour law regardless of how many calendar days are in a given month.

Gratuity then accrues in two tiers:

• Years 1–5: 21 days of daily wage per year of service
• Year 6 onwards: 30 days of daily wage per year of service

These tiers are cumulative. Eight years of service earns (5 × 21 days) + (3 × 30 days) of your daily wage. After the first full year, partial years are pro-rated — so three years and eight months is calculated as (3 × 21 days) + (8/12 × 21 days). The first year itself is not pro-rated; you must complete all 12 months before any entitlement exists.

Why "basic salary" is the most contested figure

Gratuity is calculated on basic salary only. Housing allowance, transport allowance, food allowance, commissions, and bonuses are all excluded — even when they make up the majority of your monthly pay.

Many UAE employment packages deliberately minimise the basic salary component. If your contract shows AED 4,000 basic salary and AED 11,000 in allowances, your gratuity calculates against AED 4,000, not AED 15,000. This is legal and the structure is common. Before accepting any job offer, the ratio of basic salary to total remuneration is worth examining specifically because it directly affects your end-of-service entitlement.

The 2-year cap

Article 51 imposes a hard ceiling: total gratuity cannot exceed 24 months of basic salary, regardless of length of service. Mathematically, this cap becomes relevant at roughly 25 years of continuous service, where the accumulated 21-day and 30-day tiers would otherwise exceed two years' worth of wages. If your calculated amount exceeds the cap, your employer pays the cap figure, not the higher calculated one.

Limited contracts vs. legacy unlimited contracts

Federal Decree-Law No. 33 of 2021 abolished unlimited-duration contracts for new hires from February 2022. Every contract signed since then is a fixed-term (limited) contract, renewable up to three years. Under a limited contract, the reason you leave is irrelevant to your gratuity amount — resignation and termination both receive the full calculated entitlement after one year. This was a significant change from the old law.

Under the legacy unlimited contract — which still applies to workers who were employed before 2022 and whose contracts were not converted — resignation triggers a sliding scale reduction. Resigning after one to three years earns one-third of the full amount. Resigning after three to five years earns two-thirds. Only resignation after five or more continuous years earns the full amount. Termination under an unlimited contract always pays the full amount at any service length.

If you are unsure which type applies to you: check your contract. If it specifies a fixed end date, it is a limited contract. If it runs indefinitely with no end date, it is an unlimited contract.

Common mistakes employers make in calculation

The most frequent underpayment errors are using the wrong salary base (including non-basic allowances or excluding items that the specific contract defines as basic salary), miscounting the service period around unpaid leave, and applying the wrong contract-type rules — especially misclassifying a post-2022 limited contract as a legacy unlimited contract and incorrectly applying resignation penalties.

Unpaid leave days are excluded from the qualifying service period under Article 51 — but the start and end dates of employment still anchor the total period; only the unpaid days are subtracted from the running count. Errors here typically result in the service period being shortened by more days than were actually unpaid.

When to seek legal advice

Use this calculator to establish your own estimate before your employer issues the final settlement statement. If their figure is materially lower than yours, request a written calculation breakdown in writing. If the discrepancy is not resolved, file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE) — call 800-60 or use the MOHRE app. Mediation through MOHRE is free and resolves most straightforward underpayment disputes without going to court.

For cases involving large amounts, disputed service periods, or non-standard contract terms, consult a UAE-qualified employment lawyer before you sign any final settlement deed. Signing a settlement typically extinguishes your right to claim additional amounts later. Know your number before you sign.