How UAE end-of-service gratuity is calculated.

1. Overview

End-of-service gratuity (also called end-of-service benefit or EOSB) is a lump-sum payment every employee in the UAE private sector is entitled to receive when they leave a job after completing at least one year of continuous service.

The entitlement is governed by UAE Federal Decree-Law No. 33 of 2021 (the New Labour Law), specifically Article 51, which came into effect on 2 February 2022. Prior to this, the 1980 Labour Law (Federal Law No. 8 of 1980) applied.

The formula has three inputs: your basic salary, your length of service, and your contract type. Allowances (housing, transport, etc.) are explicitly excluded.

2. Step 1, Calculate the daily wage

The daily wage is the foundation of the calculation. Article 51 defines it as:

The divisor is always 30, regardless of the actual number of days in the month. This is a legal convention, not a calendar calculation.

3. Step 2, Determine the service period

Service is measured from your first day of employment to your last working day. Days on unpaid leave are excluded, they do not count toward the gratuity-eligible service period.

The threshold rules are:

• ✗Less than 1 year, no gratuity entitlement. The first 12 months must be completed in full.
• ✓1 to 5 years, gratuity accrues at 21 days of basic salary per year, pro-rated for partial years.
• ✓More than 5 years, the first 5 years accrue at 21 days/year; every additional year accrues at 30 days/year.

Partial years are pro-rated after the first full year. For instance, 3 years and 6 months is treated as exactly 3.5 years.

4. Step 3, Apply the gratuity formula

The formula can also be expressed using months for precision. Our calculator converts your join and last-working dates to calendar months, which gives exact results that match manual MOHRE calculations.

5. New law vs. legacy unlimited contract

The 2022 reform changed how resignation is treated. Under the new law, limited contracts are the standard, and the reason for leaving is irrelevant to the gratuity amount. Legacy unlimited contracts are no longer issued, but existing ones may still apply their old rules.

"Excess" refers to the years beyond 5. All scenarios use 21 days/year for the first 5 years and 30 days/year for any years above 5, before the sliding scale (if any) is applied.

6. The 2-year cap

Regardless of the calculation, total gratuity is capped at two years of basic salary:

In practice, the cap only kicks in for employees with very long service periods, approximately 25 years or more. For most employees it never applies.

Our calculator automatically checks whether the cap applies and displays a warning if your calculated amount exceeds it.

7. Worked examples

Try these scenarios in the live calculator →

8. Article 51, reference

The complete legal basis for gratuity calculations in the UAE private sector is Article 51 of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations. Key provisions:

Source: UAE Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (effective 2 February 2022).