Understanding your UAE gratuity is important when leaving a job, whether you are resigning, completing a contract or being terminated.
For eligible private-sector expatriate employees, end-of-service gratuity is generally calculated using the employee's last basic wage, rather than the total salary package.
Under the current UAE private-sector framework, an employee who completes at least one year of continuous service can generally qualify for gratuity. The calculation is based on 21 days of basic wage for each of the first five years and 30 days for each year after five years.
Use the YESS Consultancy calculator below to obtain an indicative gratuity estimate based on your basic salary and employment period.
UAE Gratuity: Key Rules at a Glance
- Minimum service: Generally, at least one year of continuous eligible service is required.
- First 5 years: 21 days of basic wage for each year.
- After 5 years: 30 days of basic wage for each additional year.
- Calculation base: Last basic wage, not the complete salary package.
- Unpaid absence: Days of unpaid absence are excluded from the service period.
- Partial years: Fractions of a year after completing one year are generally calculated proportionately.
- Maximum: Total gratuity cannot exceed the equivalent of two years' wage under the applicable framework.
UAE Gratuity Calculator
Estimate your end-of-service gratuity using your basic salary and employment dates.
How Is Gratuity Calculated in the UAE?
The standard private-sector gratuity calculation is based on the employee's last basic wage.
The monthly basic wage is first converted into a daily wage by dividing it by 30.
The daily amount is then multiplied by the applicable gratuity days based on the employee's length of service.
First Five Years
For each of the first five years of eligible service, gratuity is calculated at 21 days of basic wage per year.
Service Beyond Five Years
After the first five years, each additional year is generally calculated using 30 days of basic wage.
UAE Gratuity Calculation Example
Assume an employee has a monthly basic salary of AED 10,000 and has completed five years of eligible service.
| Calculation | Amount |
|---|---|
| Monthly basic salary | AED 10,000 |
| Daily basic wage | AED 10,000 ÷ 30 = AED 333.33 |
| Gratuity days for first 5 years | 21 × 5 = 105 days |
| Estimated gratuity | AED 333.33 × 105 = AED 35,000 |
UAE Gratuity Examples by Length of Service
| Service | Basic Salary | Calculation | Estimated Gratuity |
|---|---|---|---|
| 1 year | AED 10,000 | 10,000 ÷ 30 × 21 | AED 7,000 |
| 2 years | AED 10,000 | 10,000 ÷ 30 × 21 × 2 | AED 14,000 |
| 5 years | AED 10,000 | 10,000 ÷ 30 × 21 × 5 | AED 35,000 |
| 6 years | AED 10,000 | First 5 years + 1 year at 30 days | AED 45,000 |
| 10 years | AED 10,000 | First 5 years + 5 years at 30 days | AED 85,000 |
| 6.5 years | AED 12,000 | 5 years at 21 days + 1.5 years at 30 days | AED 60,000 |
Is UAE Gratuity Based on Basic Salary or Total Salary?
One of the most common mistakes in gratuity calculations is using the employee's total salary package instead of the basic salary.
The standard gratuity calculation is based on the employee's basic wage.
Usually Included
The basic salary stated in the employee's employment contract is the principal calculation base.
Usually Excluded
Housing allowance, transport allowance, utilities, bonuses, commissions, overtime and other allowances are generally excluded from the gratuity calculation base.
If your total monthly package is AED 15,000 but your basic salary is AED 8,000, the standard gratuity calculation is based on AED 8,000 rather than AED 15,000.
Who Is Eligible for UAE Gratuity?
Eligibility depends on the employee's employment status, jurisdiction, contract arrangement and applicable labour rules.
For the standard private-sector expatriate framework, an employee generally needs to complete at least one year of continuous service to qualify for end-of-service gratuity.
1. Minimum Service
Less than one year of continuous eligible service generally does not result in statutory gratuity.
2. Partial Years
After the first completed year, eligible fractions of a year are generally calculated proportionately.
3. Unpaid Absence
Unpaid absence is excluded when determining the eligible service period.
4. Special Jurisdictions
DIFC, ADGM, domestic workers, UAE nationals and certain alternative end-of-service arrangements may follow separate rules.
Does Resignation Reduce Gratuity in the UAE?
Employees sometimes rely on older UAE gratuity calculations that reduced benefits depending on whether an employee resigned under an unlimited contract.
That historic approach should not be used as the main calculation method for the current standard private-sector framework.
Under the current system, the calculation should focus on the employee's eligible service period, last basic wage and the applicable 21-day and 30-day gratuity rates.
The reason for leaving should still be reviewed in the context of the employee's complete final settlement, employment contract and applicable jurisdiction.
How Does Unpaid Leave Affect UAE Gratuity?
Days of unpaid absence are not included when calculating the eligible service period for gratuity.
For example, if an employee has worked for six years but had 30 days of unpaid absence, the eligible service period may need to be reduced by those unpaid days.
Paid annual leave and other authorised paid periods should not automatically be treated as unpaid absence.
Is There a Maximum UAE Gratuity Amount?
Yes. The applicable UAE private-sector framework provides that total end-of-service gratuity cannot exceed the equivalent of two years' wage.
The cap generally becomes more relevant for employees with long service or high basic wages.
UAE Gratuity for Part-Time Employees
Part-time and other working arrangements may require a proportional calculation rather than simply applying the full-time formula.
The calculation can take into account the working hours specified in the employment contract compared with a corresponding full-time arrangement.
The calculator above is designed primarily for the standard full-time private-sector calculation and should not be relied upon as the final calculation for part-time or unusual work arrangements.
What Is Included in the UAE Final Settlement?
Gratuity is only one part of an employee's final settlement. Depending on the circumstances, the employer may also need to account for other outstanding employee entitlements.
End-of-Service Gratuity
The statutory gratuity calculated using the applicable service period and basic wage.
Unpaid Salary
Any outstanding salary or wages due to the employee.
Annual Leave
Applicable payment for unused annual leave, calculated according to the relevant rules.
Other Entitlements
Other contractual or statutory amounts may need to be considered depending on the employee's circumstances.
When Should UAE Gratuity Be Paid?
Under the current UAE private-sector framework, employers are generally required to settle wages, other employee entitlements and gratuity within 14 days from the end date of the employment contract.
Employees should therefore review their final settlement statement and compare the gratuity calculation with their employment records.
How to Calculate UAE Gratuity Step by Step
Identify Your Basic Salary
Check your employment contract and salary records to identify your last applicable basic wage.
Determine Your Eligible Service
Calculate the period between your employment start date and final working date, taking applicable unpaid absence into consideration.
Calculate the Daily Wage
Divide the monthly basic wage by 30.
Apply the 21-Day Rate
Apply 21 days of basic wage for each eligible year within the first five years.
Apply the 30-Day Rate
Apply 30 days of basic wage for each eligible year after the first five years.
Check the Maximum Cap
Confirm that the calculated amount does not exceed the applicable two-year wage maximum.
Special Cases That Need Separate Review
DIFC Employees
Employees working under DIFC employment regulations may be covered by a separate end-of-service framework.
ADGM Employees
ADGM employment arrangements may have different end-of-service rules.
UAE Nationals
UAE nationals may be covered by pension and social-security arrangements rather than the standard expatriate gratuity calculation.
Alternative Savings Scheme
Employers participating in an approved alternative end-of-service savings arrangement may require a different analysis.
Common UAE Gratuity Calculation Mistakes
Using Total Salary
Calculating gratuity using the complete salary package instead of the applicable basic wage can significantly overstate the entitlement.
Ignoring Unpaid Absence
Unpaid absence may need to be removed from the eligible service period.
Forgetting the 30-Day Tier
Service beyond five years is calculated using 30 days per year rather than 21 days.
Ignoring Partial Years
Eligible service after the first completed year can include fractions of a year.
Applying Old Resignation Rules
Historical gratuity reduction rules should not be applied automatically to current employment arrangements.
Ignoring Jurisdiction
DIFC, ADGM and other special employment arrangements may require a separate calculation.
Frequently Asked Questions About UAE Gratuity
How is gratuity calculated in the UAE?
For eligible private-sector expatriate employees, gratuity is generally calculated using the last basic wage. The applicable rate is 21 days for each of the first five years and 30 days for each year after five years.
Is UAE gratuity calculated on basic salary?
Yes. The standard gratuity calculation uses the employee's basic wage rather than the total salary package.
Do I get gratuity if I resign?
An eligible employee who has completed at least one year of continuous service can generally receive gratuity under the current private-sector framework. The old resignation reduction method should not be used as the standard current-law calculation.
How much gratuity do I get after five years?
Five years represents 105 gratuity days because each of the first five years is calculated at 21 days. For example, with a basic salary of AED 10,000, the indicative gratuity would be AED 35,000.
What happens after five years?
Each additional eligible year after the first five years is generally calculated at 30 days of basic wage.
Is there a maximum gratuity amount in the UAE?
Yes. The total gratuity is generally capped at the equivalent of two years' wage under the applicable UAE private-sector rules.
Does unpaid leave reduce gratuity?
Unpaid absence is generally excluded when calculating the eligible period of service.
Are allowances included in gratuity?
Housing, transport, utilities and other allowances are generally excluded from the standard gratuity calculation, which is based on the applicable basic wage.
When should gratuity be paid?
Under the UAE private-sector framework, outstanding wages, other entitlements and gratuity should generally be paid within 14 days from the end date of the employment contract.
Can the calculator give the exact final settlement?
No. The calculator provides an estimate based on the standard formula. Actual entitlement can differ because of unpaid absence, employment jurisdiction, part-time arrangements, alternative end-of-service schemes, contractual terms, deductions and other circumstances.
Final Takeaway
UAE gratuity calculation can appear complicated, but the standard private-sector formula is relatively straightforward once the correct basic wage and eligible service period have been identified.
The first five years are generally calculated at 21 days of basic wage per year, while service beyond five years is generally calculated at 30 days per year.
Employees should remember that gratuity is generally calculated using the basic wage rather than the total salary package. Unpaid absence, special employment jurisdictions and alternative end-of-service arrangements can also affect the final amount.
Using a calculator is a useful first step, but a professional review is advisable where the final settlement involves unusual contractual terms, disputes, significant deductions or special employment arrangements.
Need Help Reviewing UAE Gratuity?
YESS Consultancy provides accounting, payroll, tax and business advisory support for companies operating in the UAE.
Our team can assist businesses with employee final settlements, gratuity calculations, payroll reviews, accounting records and UAE compliance requirements.
If you are an employer preparing employee settlements or an employee who wants to verify a gratuity calculation, a detailed review can help identify calculation errors and potential compliance issues.
Contact YESS Consultancy for professional UAE payroll and gratuity support.
Disclaimer: This article and calculator are provided for general informational purposes only and do not constitute legal, employment, accounting or financial advice. The calculator provides an estimate based on the standard UAE private-sector gratuity formula and does not account for every possible employment arrangement, jurisdiction, contractual provision, deduction, dispute or alternative end-of-service scheme. Actual employee entitlement should be verified against the applicable UAE legislation, employment contract, payroll records and relevant authority requirements.