UAE End of Service Gratuity: How to Calculate What You're Owed (2026)

Who Qualifies for Gratuity in the UAE?

Under UAE Federal Decree-Law No. 33 of 2021 (the UAE Labour Law), any employee who has completed one or more continuous years of service with the same employer is entitled to end of service gratuity. This applies to employees across all emirates — Dubai, Abu Dhabi, Sharjah, and the rest — as long as they are employed in the private sector under a standard employment contract.

Employees in free zones governed by their own regulations (such as DIFC and ADGM) follow slightly different rules, though the principle of gratuity payment after qualifying service remains similar. Government employees follow separate federal or local government pension and gratuity schemes. If you've worked for less than one year, you are not entitled to gratuity under the standard labour law.

The Gratuity Calculation Formula

The gratuity formula is straightforward and based on your basic salary (not total salary — housing, transport, and other allowances are excluded). Here is how it works:

• First 5 years of service: You are entitled to 21 calendar days' basic salary for each year of service.
• After 5 years of service: You are entitled to 30 calendar days' basic salary for each additional year beyond the fifth.

The daily rate is calculated by dividing your monthly basic salary by 30. For example, if your basic salary is AED 15,000 per month and you've worked for 7 years, your gratuity would be: (AED 500 x 21 days x 5 years) + (AED 500 x 30 days x 2 years) = AED 52,500 + AED 30,000 = AED 82,500. The total gratuity is capped at two years' total salary, regardless of how long you have worked.

Contract Type: Does It Still Matter?

Under the previous labour law, gratuity entitlements differed significantly depending on whether you were on a limited (fixed-term) or unlimited contract, and whether you resigned or were terminated. The 2022 labour law update simplified this considerably. All employment contracts in the UAE are now fixed-term (limited) contracts, with a maximum duration of three years, renewable.

Under the current law, the full gratuity entitlement applies regardless of whether the employee resigns or is terminated, provided the employee has completed at least one year of service. The old rules that reduced gratuity for employees who resigned before completing five years no longer apply to contracts governed by the new law. However, if your employment began before February 2022 and your contract was never converted, older provisions may still partially apply — check with your HR department.

Common Deductions and Disputes

Your employer may deduct certain amounts from your gratuity. The most common lawful deduction is any outstanding debt you owe the company — such as salary advances, training cost recovery clauses (if contractually agreed), or company property not returned. Your employer cannot deduct for normal operational costs, arbitrary penalties, or vague "administrative fees."

If you are terminated for gross misconduct under Article 44 of the Labour Law (such as fraud, forgery, or assault), your employer may deny gratuity entirely. However, this is a narrow exception and must be properly documented. In practice, many disputes arise over what counts as "basic salary" — some employers try to structure compensation with a low basic and high allowances to minimize gratuity liability. If your basic salary seems artificially low compared to your total package, this is worth raising during your exit process.

Payment Timeline: When Should You Receive It?

Under the UAE Labour Law, your employer must pay all end of service entitlements — including gratuity, remaining salary, unused leave balance, and any other dues — within 14 calendar days of your last working day. This is a legal deadline, not a guideline. The payment should be made in UAE dirhams unless both parties have agreed otherwise in writing.

In practice, many employers process gratuity alongside the final payroll cycle, which may take slightly longer. If your employer requests more time due to administrative processing, a few extra days is reasonable, but anything beyond 30 days is a red flag. Keep a written record of your last working day and any communication about your final settlement to support your case if payment is delayed.

What to Do If Your Employer Doesn't Pay

If your employer fails to pay your gratuity within the legal timeframe, your first step is to file a complaint through the MOHRE (Ministry of Human Resources and Emiratisation) system. You can do this through the MOHRE app, the MOHRE website, or by visiting a Tasheel service centre in person. The complaint process is free and can be initiated even if you have already left the UAE.

MOHRE will first attempt to mediate between you and your employer. If mediation fails within 14 days, the case is referred to the labour court. For claims under AED 50,000, the process is handled through a simplified fast-track procedure. Keep all documentation handy: your employment contract, salary certificates, Emirates ID copy, passport copy, and any correspondence about your final settlement. The MOHRE app also allows you to track case status remotely, which is especially useful if you have already relocated.

Practical Tips Before You Leave

Before your last day, request a written breakdown of your gratuity calculation from HR and verify it against your own numbers. Ensure your basic salary on the calculation matches your contract — not a lower figure. If you have unused annual leave, confirm whether it will be paid out (it should be, by law) and whether it's included in the same settlement.

Open a bank account in your destination country before leaving the UAE so your employer can wire your gratuity directly. Keeping your UAE bank account open until the final settlement clears is also a smart move. Finally, download the MOHRE app and save your labour contract number — you'll need it if any issues arise after departure.