UAE gratuity rules: how end-of-service pay works under the 2021 Labour Law
How UAE end-of-service gratuity is worked out, why resigning no longer cuts it, and the mistakes that cost employees money.
If you work for a private company in the UAE on a full-time contract, you’re entitled to an end-of-service gratuity when the job ends. The rules come from Article 51 of Federal Decree-Law No. 33 of 2021, the Labour Law that replaced the 1980 law in February 2022, and they’re simpler and more generous than many people expect.
The formula
- 21 days of basic salary for each of your first five years.
- 30 days of basic salary for each year after that.
- Part years count in proportion, once you’ve completed one full year.
- The total can’t be more than two years’ pay.
Examples on AED 12,000 basic salary
| Service | Days of pay | Gratuity |
|---|---|---|
| 11 months | 0 | AED 0 |
| 3 years | 63 | AED 25,200 |
| 5 years | 105 | AED 42,000 |
| 10 years | 255 | AED 102,000 |
These use a daily wage of basic salary ÷ 30 (AED 400 a day), which is what most employers use. Ten years gives 5 × 21 plus 5 × 30 days, which is 255 days, or AED 102,000.
Resigning no longer cuts your gratuity
Under the old law, people who resigned before five years got a reduced gratuity, and limited and unlimited contracts were treated differently. The 2021 law removed both. As long as you’ve completed a year, you get the full amount whether you resign or your employer ends the contract. Many online calculators still use the old fractions, so check which rules a calculator follows before trusting it.
Three things that change the number
- Only basic salary counts. Housing, transport and other allowances are left out, which is why a high total package can still mean a modest gratuity. Check how your contract splits your pay.
- Unpaid leave is taken off your service. Days of unpaid absence don’t count towards your years.
- The daily wage method. The law doesn’t say whether to divide by 30 or by 365/12. Dividing by 30 gives a slightly higher figure.
When it must be paid
Your employer must pay your gratuity and other dues within 14 days of the contract ending. They can deduct money you legally owe them. If they don’t pay, you can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE).
Savings schemes, free zones and Emiratis
- Since 2023, employers can join a voluntary savings scheme instead, paying 5.83% of basic salary a month (8.33% after five years) into an investment fund.
- DIFC and ADGM have their own employment laws and end-of-service arrangements.
- UAE nationals are covered by the pension system rather than gratuity.
Work out your own gratuity, with unpaid leave and your exact dates, with the UAE gratuity calculator.