What Is UAE End of Service Gratuity and How Much Are You Entitled To?

Key Takeaways

• End of service gratuity is calculated based on 21 days salary for first 5 years, then 30 days per year thereafter
• Gratuity is calculated on basic salary only, excluding allowances and bonuses
• Employees are entitled to gratuity after completing one year of continuous service

UAE end of service gratuity is a mandatory payment that every employee receives when leaving their job, provided they have worked for at least one year. Under Federal Decree Law No. 33 of 2021, expatriate workers are entitled to 21 days' basic salary for each year of the first five years, and 30 days for each subsequent year.Understanding Your Legal Right to End of Service BenefitsEvery private sector

employee in the UAE has a legal entitlement to gratuity payments upon completion of their employment contract. This benefit serves as financial security when transitioning between jobs or returning to your home country.The UAE Ministry of Human Resources and Emiratisation (MOHRE) strictly enforces these regulations to protect worker rights. Companies cannot deny gratuity payments to eligible employees,

regardless of whether you resign or face termination.How Is UAE End of Service Gratuity Calculated?For Limited Contract EmployeesIf you hold a limited (fixed-term) contract, your gratuity calculation follows this structure:Years 1-5: 21 days of basic salary per year Years 6+: 30 days of basic salary per yearFor Unlimited Contract Employees Who ResignResignation from unlimited contracts requires meeting

specific conditions:Less than 1 year: No gratuity entitlement1-3 years: One-third of 21 days' basic salary per year3-5 years: Two-thirds of 21 days' basic salary per year5+ years: Full 21 days for first 5 years, then 30 days per yearFor Unlimited Contract Employees Who Are TerminatedIf your employer terminates your unlimited contract:1-5 years: 21 days' basic salary per year5+ years: 21 days for first

5 years, 30 days for subsequent yearsWhat Counts as Basic Salary for Gratuity Calculation?Your gratuity calculation uses only your last drawn basic salary. This excludes:Housing allowanceTransportation allowanceOvertime paymentsFood allowanceMobile phone allowanceAny other benefits or bonusesFor example, if your total package is AED 8,000 but your basic salary is AED 5,000, only AED 5,000 is used

for gratuity calculations.Step-by-Step Gratuity Calculation ExamplesExample 1: Limited Contract EmployeeDetails: 7 years of service, AED 6,000 basic salaryCalculation:First 5 years: (AED 6,000 ÷ 30) × 21 × 5 = AED 21,000Next 2 years: (AED 6,000 ÷ 30) × 30 × 2 = AED 12,000Total Gratuity: AED 33,000Example 2: Unlimited Contract ResignationDetails: 4 years of service, AED 4,500 basic salary, resignationCalculation:3-5

years service = Two-thirds entitlement(AED 4,500 ÷ 30) × 21 × 4 × (2/3) = AED 8,400Total Gratuity: AED 8,400When Are You Not Eligible for Gratuity?The UAE Labour Law specifies situations where employees forfeit gratuity rights:Employment period less than one yearDismissal under Article 120 for serious misconductResignation without proper notice (unlimited contracts only)Involvement in illegal

activities or violence at workAbandoning work duties without valid reasonTimeline for Gratuity PaymentYour employer must pay end of service benefits within 14 days...

About This Article

This article provides general information about UAE labour law and employment regulations. The information is based on Federal Decree-Law No. 33 of 2021 and subsequent amendments. For specific legal advice regarding your situation, please consult with a qualified legal professional or contact the Ministry of Human Resources and Emiratisation (MOHRE).