UAE gratuity rules: how end-of-service pay works under the 2021 law
Everything that decides your end-of-service gratuity in mainland UAE — in plain English, with the article behind each rule. Want the number first? The gratuity calculator does the maths and shows the breakdown.
Who qualifies
End-of-service gratuity is governed by Federal Decree-Law No. 33 of 2021, in force across mainland UAE since 2 February 2022. Under Article 51, any full-time worker who completes one continuous year of service is entitled to gratuity when they leave — whatever the reason. Below a year, none is due. Periods of unpaid leave don't count toward that year, or toward later accrual.
What counts as your wage
This is where most estimates go wrong. Gratuity is calculated on your basic salary only. Under the law's definition of wage (Article 1), housing, transport, utility and other allowances, plus bonuses, commissions and overtime, are all excluded. For many workers, allowances make up 30–50% of monthly pay — so the gratuity figure is often noticeably smaller than a quick mental estimate of "a month's salary per year". It isn't an error; it's the wage base the law defines.
The formula
Your daily wage is your basic monthly salary divided by 30. From there:
- Years 1–5: 21 days of basic pay for each year.
- Year 6 onward: 30 days of basic pay for each additional year.
- Part-years: after your first full year, every extra day is paid pro-rata.
Here's the same six-year service worked at three salary levels:
| Basic salary | Daily wage | Days (6 yrs) | Gratuity |
|---|---|---|---|
| AED 4,000 | 133.33 | 135 | AED 18,000 |
| AED 10,000 | 333.33 | 135 | AED 45,000 |
| AED 25,000 | 833.33 | 135 | AED 112,500 |
Six years = (21 × 5) + (30 × 1) = 135 days of basic pay. Multiply by the daily wage for the total.
Resignation vs termination
Under the old Federal Law of 1980, resigning under an "unlimited contract" could cut your gratuity to a third or two-thirds. That no longer exists. The 2021 law makes every contract fixed-term, and resignation does not reduce your gratuity. If a calculator still asks whether your contract is "limited or unlimited", it's applying a repealed law — and will likely understate what you're owed. Whether you resign, your contract ends, or your employer terminates you, the calculation is the same.
Dismissal under Article 44
Article 44 lists the serious grounds on which an employer can dismiss without notice. Under the old law, a dismissal like this forfeited gratuity entirely. The 2021 law changed that: an employee dismissed under Article 44 keeps their end-of-service gratuity, provided they completed a year of service. These dismissals are often contested, so if one applies to you it's worth getting advice — but the starting position is that your gratuity stands.
The two-year cap
Article 51(6) caps total gratuity at two years' basic salary. Because gratuity accrues at 21–30 days a year, this ceiling is only reached after about 25 years of service — but for very long-tenured workers it's real, and a good calculator shows the cap on its own line so you can see the adjustment.
Unpaid leave
Time spent on unpaid leave is excluded from your service period. If you took extended unpaid leave, subtract those days before working out your years of service — the calculator has a field for this.
The Savings Scheme
Some employers have moved staff into the UAE's voluntary alternative end-of-service savings scheme. Where that's happened, your traditional gratuity is frozen at the enrolment date — calculated on the rules above for the service up to that point — and from then on the employer makes monthly contributions into a fund instead. If you're enrolled, calculate your traditional gratuity only up to your enrolment date for a like-for-like figure.
Free zones are different
The financial free zones run their own regimes. DIFC employees are covered by the funded DEWS scheme (monthly employer contributions rather than a lump sum at the end), and ADGM has its own end-of-service rules. If you work in either, the mainland calculation here won't match your entitlement — check your zone's scheme directly.
When to get advice
This guide and the calculator give you a confident, law-based estimate — the figure to take into a conversation with HR. But contracts vary, employers sometimes pay above the legal minimum, and dismissal cases can turn on specifics. For a binding figure, confirm with MOHRE or a qualified professional.
Based on Federal Decree-Law No. 33 of 2021, Articles 1, 44 & 51 (incl. 51(6)) — last verified 14 June 2026.
Frequently asked
Is UAE gratuity calculated on basic or gross salary?
Basic salary only. Under Article 1 of Federal Decree-Law 33 of 2021, housing, transport and other allowances are excluded from the wage used for end-of-service gratuity.
Does resignation reduce gratuity in the UAE now?
No. All contracts are fixed-term under the 2021 law, and resignation does not reduce gratuity. The old reduction rules for 'unlimited contracts' were repealed in 2022.
Can my employer cancel my gratuity if I'm dismissed?
Not for the reasons it once could. Even a summary dismissal under Article 44 no longer forfeits gratuity under the 2021 law, provided you completed a year of service — though specific cases can be disputed.
What is the maximum gratuity in the UAE?
Total gratuity cannot exceed two years' basic salary (Article 51(6)). In practice this cap only applies after roughly 25 years of service.
Do DIFC and ADGM follow these rules?
No. The financial free zones run their own end-of-service regimes — ADGM and DIFC (which uses the funded DEWS scheme) — and aren't covered by the mainland calculation.
Work out your figure
Put these rules to work on your own salary and dates.
Open the gratuity calculator