Know your UAE end-of-service gratuity.

End-of-service gratuity is the lump sum your employer must pay you when your UAE employment ends — a statutory benefit under Federal Decree-Law No. 33 of 2021, the country’s labour law since 2 February 2022. The formula is fixed and generous once you understand it: 21 days of basic wage for each of your first five years of service, then 30 days a year after that, paid on top of any outstanding salary, leave and notice. Two details trip most people up, and this calculator gets both right — gratuity is worked on basic salary only (not your allowance-inflated gross), and it is capped at two years’ basic wage no matter how long you stay. Under the 2021 law you now receive your full gratuity even if you resign, provided you have completed at least one year of continuous service; the old rule that shrank a resigning employee’s entitlement was removed. Enter your basic monthly salary and your years of service, and the tool shows your gratuity, the day-by-day breakdown, and how the cap applies. UAE-focused throughout, in dirhams, aligned to MOHRE guidance.

What end-of-service gratuity is in the UAE

The UAE has no state pension for expatriate workers, so end-of-service gratuity — often just called “gratuity” or end-of-service benefit (EOSB) — is the single most important statutory payment tied to leaving a job. It is a lump sum your employer is legally required to pay when your employment relationship ends, whether you resign, are terminated, reach the end of a contract, or retire. It is funded entirely by the employer; nothing is deducted from your salary to build it. For most residents it is the closest thing to a retirement or severance fund the system provides, which is why getting the number right matters.

Gratuity is governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, which came into force on 2 February 2022 and replaced the old Federal Law No. 8 of 1980. The core arithmetic — 21 days a year for the first five years, 30 days a year afterwards — carried over unchanged, but the 2021 law modernised the framework around it: it standardised employment on fixed-term contracts, clarified how basic salary must be stated, and, importantly, removed the penalties that used to reduce a resigning employee’s gratuity. The result is a cleaner, more worker-friendly regime that this calculator implements directly.

To qualify at all you need at least one year of continuous service. Complete less than a year — including leaving during probation — and no gratuity is due. Once you cross the one-year mark, every year of service earns its accrual, and partial years beyond the first are pro-rated to the day. The table below shows how the lump sum grows with tenure for a worker on a basic salary of AED 10,000 a month, so you can see the shape of the benefit before running your own numbers.

21 days of basic wage per year for the first 5 years, then 30 days per year — daily wage = basic ÷ 30. The rate jumps at year 6, which is why the gratuity accelerates with longer service. Figures computed with the same model as the calculator.

Two features stand out immediately. The accrual accelerates after five years — each year past the fifth is worth 30 days instead of 21, roughly a 43% jump in the yearly rate — which rewards longer service. And the total is eventually capped, a point we return to below. Everything that follows unpacks this: exactly how the formula works, what “basic salary” means, how the 2021 reform changed resignation, and a fully worked example.

How UAE gratuity is calculated: 21 and 30 days

The calculation has four moving parts, and the calculator applies them in order. Understanding each one lets you check any gratuity figure by hand.

1. The daily wage. Gratuity is expressed in days of pay, so the first step is converting your monthly basic salary into a daily rate. The UAE method treats one month as 30 days, so your daily wage is simply basic monthly salary ÷ 30. A basic salary of AED 10,000 gives a daily wage of AED 333.33. This is the MOHRE / u.ae convention and the one this tool uses throughout.

2. The first five years — 21 days a year. For each of your first five years of service you earn 21 days of basic wage. That is 21 × your daily wage per year. At AED 10,000 basic, one full year earns 21 × AED 333.33 = AED 7,000, and a full five years earns 5 × 21 = 105 days, or AED 35,000.

3. Every year after five — 30 days a year. Once you pass five years, each additional year earns 30 days of basic wage — a full month’s basic per year. A worker with ten years of service earns the 105 days from the first five years plus 5 × 30 = 150 days for years six to ten, for 255 days in total. Partial years in this band are pro-rated, so six-and-a-half years earns 30 × 1.5 = 45 days on top of the first-five-year block.

4. The two-year cap. However long you stay, total gratuity cannot exceed two years’ basic wage — that is basic salary × 24 months. For most careers the cap never bites: on AED 10,000 basic it sits at AED 240,000 — 720 days of basic wage, which the 21-then-30-day accrual first reaches after about 25 and a half years of service (105 days for the first five years, then 30 a year: 105 + 30 × 20.5 = 720). But for very long-tenured employees it is a real ceiling, and the calculator applies it automatically. The day-by-day accrual is still shown in full so you can see where the cap starts to limit the raw figure. A note on the statute: Article 51(6) writes the ceiling as two years’ wage, and the law’s definitions distinguish “Basic Wage” (which excludes allowances) from “Wage” (basic plus cash allowances and benefits). Because the accrual itself runs on basic wage under Article 51(2), this calculator applies the narrower, more conservative basic-wage reading — basic × 24 — throughout, and every figure on this page follows it.

Put together, the formula is: gratuity = (21 × daily wage × min(years, 5)) + (30 × daily wage × max(years − 5, 0)), then limited to basic × 24. That is exactly what the calculator computes, and exactly what the tables on this page are built from.

What counts as basic salary (and what does not)

The most common reason a gratuity estimate turns out wrong is using the wrong salary figure. Gratuity is calculated on basic salary only — the core wage stated in your contract — and explicitly excludes allowances. Housing, transport, travel, mobile, education and any other allowance, plus commissions, bonuses and overtime, do not count towards the gratuity base. Only the basic component does.

This matters because UAE compensation is heavily allowance-loaded. It is common for basic salary to be set at 50–60% of total pay, with the rest paid as housing and other allowances. A resident earning AED 20,000 a month all-in might have a basic of only AED 12,000 — and gratuity is worked on the AED 12,000, not the AED 20,000. Confusing gross pay with basic is the single biggest source of over-estimation, so enter your basic monthly salary in the calculator, the figure your contract labels as basic wage, not your total package.

Federal Decree-Law No. 33 of 2021 reinforced this by requiring employers to state basic salary clearly and separately from allowances in the employment contract, precisely so the gratuity base is unambiguous. If your contract does not break out basic pay, or sets an artificially low basic to shrink the eventual gratuity, that is worth querying — MOHRE can be asked to review a contract whose structure looks designed to defeat the entitlement. A useful sense-check: your basic should be a realistic proportion of your total pay, not a token figure. For a full picture of how basic, allowances and benefits fit together across a job offer, our employment benefits calculator breaks down the whole package.

Resignation now pays full gratuity

The biggest change the 2021 law brought to gratuity concerns resignation, and it is firmly in the worker’s favour. Under the current law, if you resign after completing at least one year of continuous service, you receive your full gratuity for the years you served — the same 21-day and 30-day accrual described above, with the final partial year pro-rated. Resigning no longer costs you any part of your entitlement.

This is a genuine break from the past. Under the old Federal Law No. 8 of 1980, an employee on an unlimited contract who resigned before completing five years had their gratuity reduced on a sliding scale — only a third was payable for one-to-three years of service, two-thirds for three-to-five years, and the full amount only after five years. That reduction has been abolished. It is mentioned here only so you can disregard any older guidance, calculator or article that still applies it; it is no longer part of UAE law and this tool does not apply any resignation penalty.

The other structural change was the end of the unlimited (indefinite-term) contract. The 2021 law converted all UAE employment to fixed-term contracts, renewable by agreement, and the old limited-versus-unlimited distinction — which used to drive different gratuity and early-termination outcomes — was removed with it. Every current contract is fixed-term, so the way you leave (resignation versus the contract ending versus termination) no longer changes the gratuity formula: what matters is your basic salary and your completed years of service. The only threshold that still applies is the one-year minimum — leave before completing a year and no gratuity is due. The table below shows how the same ten years of service pays out across a range of basic salaries, so you can locate your own figure.

Gratuity is worked on basic salary only (allowances excluded) and scales directly with it — 10 years earns 255 days of basic wage in every row. The two-year cap (basic × 24) does not bite at this tenure.

The pattern is linear in salary: double the basic and you double the gratuity, because the formula scales directly off the daily wage. That makes your basic salary the single biggest lever on the eventual lump sum — another reason the basic-versus-gross distinction above is worth getting right.

A worked example: ten years on AED 10,000 basic

A concrete case ties the formula together. Take a resident who has worked ten full years in the UAE on a basic salary of AED 10,000 a month and is now leaving — by resignation or otherwise, the result is the same under the current law.

Step 1 — daily wage. AED 10,000 ÷ 30 = AED 333.33 a day.

Step 2 — first five years at 21 days. 5 years × 21 days = 105 days. 105 × AED 333.33 = AED 35,000.

Step 3 — years six to ten at 30 days. 5 years × 30 days = 150 days. 150 × AED 333.33 = AED 50,000.

Step 4 — total, then check the cap. AED 35,000 + AED 50,000 = AED 85,000. The two-year cap here is AED 10,000 × 24 = AED 240,000, so the cap does not bite and the full AED 85,000 is payable.

So ten years on AED 10,000 basic yields AED 85,000 — equivalent to about 8.5 months of basic pay, or 255 days. That is the figure the calculator returns for these inputs, and it is worked from the same model as the tables above.

Change either input and the whole result moves: a higher basic scales the figure up in proportion, and each extra year past the fifth adds a full 30 days. That is the trade-off surface the calculator makes instant — adjust your basic salary and years of service and the gratuity, the accrual split, and the cap check all update together.

Method, MOHRE sources & honest limits

The calculator implements the statutory formula directly. For your basic monthly salary it computes a daily wage of basic ÷ 30, awards 21 days per year for the first five years and 30 days per year thereafter (pro-rating partial years), requires at least one year of continuous service, and applies the two-year cap (basic × 24). No resignation reduction and no limited-versus-unlimited distinction is applied, because the current law — Federal Decree-Law No. 33 of 2021 — contains neither. The tables and worked example on this page are generated from the very same model, so a printed figure and the calculator can never disagree.

The framework follows the UAE’s labour law as administered by the Ministry of Human Resources and Emiratisation (MOHRE). The primary sources are Federal Decree-Law No. 33 of 2021 and its executive regulations, and the plain-language guidance published on the government portal u.ae and by mohre.gov.ae. Employers must pay the gratuity, along with any other end-of-service dues, within 14 days of the last working day; late payment can attract penalties, and a dispute can be raised with MOHRE — but under Article 54(9) a claim for any right owed under the law is not heard once two years have passed from the date the work relationship ended. (The one-year limit that older guides still quote came from the repealed Federal Law No. 8 of 1980.)

Three honest limits. First, this is a planning estimate, not a legal determination: unusual situations — unpaid leave that does not count towards service, disciplinary dismissal under the specific gross-misconduct grounds in the law, free-zone employers (DIFC and ADGM run their own end-of-service regimes, and DIFC operates the DEWS savings scheme in place of a classic gratuity), and domestic workers (covered by a separate law) — can change the outcome, and are outside the scope of the standard formula this tool applies. Second, gratuity is worked on basic salary as defined in your contract; if your contract structures pay in an unusual way, your actual entitlement may differ and is worth confirming with MOHRE or a licensed advisor. Third, the UAE levies no personal income tax, so gratuity is paid gross — but residents who remain taxable in their home country should check their own obligations. For anything contentious, keep your contracts and payslips and raise it with MOHRE. Content last verified July 2026.

UAE gratuity — frequently asked questions