End-of-service gratuity for private-sector employees in the UAE is set by Article 51 of Federal Decree-Law No. 33 of 2021, the Labour Law that took effect in February 2022. It applies to foreign employees on full-time contracts; UAE nationals are covered by the pension system instead.

The rules

You need at least one year of continuous service. Under a year, no gratuity is due.
For each of the first five years: 21 days of basic salary.
For each year after five: 30 days of basic salary.
Part years count in proportion once you’ve completed the first year.
It’s based on your last basic salary. Housing, transport and other allowances don’t count.
Days of unpaid leave are taken off your service.
The total can’t be more than two years’ pay.
Your employer must pay it within 14 days of your contract ending, and can deduct money you legally owe them.

Worked example

Basic salary AED 12,000, from 1 January 2018 to 31 December 2024 (just over 7 years).

Daily basic wage: 12,000 ÷ 30 = AED 400.
First five years: 5 × 21 = 105 days.
The remaining 2.01 years: 2.01 × 30 = 60.2 days.
165.2 days × AED 400 = about AED 66,066.

Does resigning reduce my gratuity?

No. Under the old 1980 law, people who resigned early got a reduced amount, and unlimited and limited contracts were treated differently. The 2021 law removed both: you receive the full gratuity whether you resign or your employer ends the contract, as long as you have completed one year. If you see calculators with resignation fractions, they are using the old rules.

Daily wage: divide by 30 or by 365?

The law doesn’t say how to turn a monthly salary into a daily wage. Most employers divide the monthly basic by 30; some multiply by 12 and divide by 365, which gives a slightly lower figure (AED 65,161 instead of 66,066 in the example). Check your contract or ask HR which they use.

Savings scheme instead of gratuity

Since 2023 employers can join a voluntary end-of-service savings scheme instead of paying a lump sum at the end. They pay 5.83% of basic salary a month for staff with under five years’ service and 8.33% after that into an investment fund. If your employer has joined, your benefit comes from the fund rather than this formula.

Free zones and government jobs

DIFC and ADGM have their own employment laws and end-of-service arrangements, and federal and emirate government employees follow separate rules. This calculator covers mainland private-sector jobs and free zones that follow the federal Labour Law.

Sources

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