End-of-service gratuity is a lump sum owed to private-sector employees in the UAE when their employment ends. Federal Decree-Law 33 of 2021 sets how it is worked out.
The formula
- Eligibility: at least one year of continuous service.
- First five years: 21 days of basic wage for each year.
- After five years: 30 days of basic wage for each additional year.
- Part years: counted pro rata.
- Cap: total gratuity cannot exceed two years of basic wage.
Gratuity is based on basic wage only, not allowances such as housing or transport.
A worked example
An employee with a basic wage of AED 12,000 a month leaves after 7 years.
| Step | Amount |
|---|---|
| Daily wage (12,000 ÷ 30) | AED 400 |
| First 5 years: 5 × 21 × 400 | AED 42,000 |
| Next 2 years: 2 × 30 × 400 | AED 24,000 |
| Total gratuity | AED 66,000 |
Resignation and payment
- Under the 2021 law, resigning no longer reduces gratuity.
- Gratuity is due within 14 days of the end of employment.
- Unpaid leave days are generally excluded from service.
- Amounts the employee owes the employer can be deducted.
For employers
Accrue gratuity monthly in your accounts, so the liability is visible and there is no surprise when a long-serving employee leaves.
Work out any employee's figure with our free gratuity calculator.
Frequently asked questions
No. It is based on basic wage, not allowances.
Yes. It cannot exceed two years of basic wage.
