How is UAE end of service gratuity calculated?

UAE end of service gratuity (under Federal Decree-Law No. 33 of 2021, effective 2 February 2022) is calculated as follows: Step 1: Find your daily rate Daily rate = Monthly basic salary ÷ 30 Step 2: Calculate gratuity days based on service duration First 5 years: 21 days per year After 5 years: 30 days per year Step 3: Multiply Gratuity = Daily rate × Total gratuity days Step 4: Apply the cap Maximum gratuity = 24 months' basic salary (2 years) Examples: AED 10,000 basic, 3 years: Daily rate = AED 10,000 ÷ 30 = AED 333.33 Gratuity days = 21 × 3 = 63 days Gratuity = 333.33 × 63 = AED 21,000 AED 10,000 basic, 7 years: Gratuity days = (21 × 5) + (30 × 2) = 105 + 60 = 165 days Gratuity = 333.33 × 165 = AED 55,000 AED 10,000 basic, 5 months (less than 1 year): No gratuity — minimum 1 year required Key rule: Gratuity is calculated on the BASIC salary only, not on total remuneration (allowances, bonuses, commissions are excluded unless they form part of the basic wage). Cap example: AED 30,000 basic, 25 years: Uncapped would be: AED 333,333 × 405 days × ... but cap = 24 × AED 30,000 = AED 720,000 Since calculation < cap in this case, full amount applies.

Does gratuity differ for resignation vs termination under the 2022 UAE Labour Law?

Under the new UAE Labour Law (Federal Decree-Law No. 33 of 2021, effective 2 February 2022), gratuity calculation is the SAME whether you resign or are terminated. This is a major change from the old law: OLD LAW (pre-2022) — for unlimited contracts: Resignation with 1–3 years' service: 1/3 of full gratuity Resignation with 3–5 years' service: 2/3 of full gratuity Resignation with 5+ years' service: full gratuity Termination: always full gratuity NEW LAW (2022) — for fixed-term contracts: All contracts are now limited (fixed-term, up to 3 years, renewable) Gratuity = full entitlement regardless of whether you resigned or were terminated No more 1/3 or 2/3 reduction for resignation Transitional period: Employees on old unlimited contracts who had not transitioned by 1 February 2023 were automatically transitioned to fixed-term contracts. Their accrued gratuity under the old contract was preserved at the date of transition. Exceptions — situations where gratuity may be forfeited: 1. Gross misconduct leading to termination under Article 44 (employee caught stealing, assaulting colleagues, etc.) 2. Employee abandoning work without reason for more than 7 consecutive or 20 non-consecutive days in a year 3. Employee convicted of a crime relating to honour, honesty, or public morals Always verify your contract type and applicable law with a UAE-licensed legal professional.

What is included in 'basic salary' for gratuity calculation?

UAE gratuity is calculated on the basic wage only — not the full package. What counts as basic salary: ✓ The basic wage stated in your employment contract ✓ The fixed monthly amount before allowances What is EXCLUDED from gratuity calculation: ✗ Housing allowance (HRA) ✗ Transport allowance ✗ Food allowance ✗ Education allowance ✗ Medical allowance ✗ Phone allowance ✗ Annual bonus ✗ Commission (unless contractually classified as basic) ✗ Overtime pay ✗ End of year bonus Example: Total package AED 25,000/month: Basic salary: AED 12,000 Housing allowance: AED 8,000 Transport: AED 2,000 Other: AED 3,000 → Gratuity is calculated on AED 12,000 only Why this matters: AED 12,000 basic vs AED 25,000 total over 5 years: Gratuity on basic: AED 12,000 ÷ 30 × 105 = AED 42,000 If it were on total: AED 25,000 ÷ 30 × 105 = AED 87,500 Difference: AED 45,500 — significant! Some contracts structure salary to inflate the basic component specifically to increase gratuity entitlement. MoHRE (Ministry of Human Resources & Emiratisation) has the authority to verify the genuine basic salary in disputes. New contracts from 2022: Increasingly, UAE employers bundle all components into a single salary with no separate allowances. In this case, the entire monthly salary is the basic salary for gratuity purposes.

How does DIFC gratuity differ from mainland UAE?

The Dubai International Financial Centre (DIFC) is a financial free zone with its own employment law — the DIFC Employment Law (DIFC Law No. 4 of 2021). Key differences: Gratuity rate: Mainland: 21 days/yr for years 1–5, then 30 days/yr for years 5+ DIFC: 21 days per year for ALL years (no increase after year 5) Cap: Mainland: Maximum 2 years' basic salary (24 months) DIFC: NO statutory cap on gratuity Effect: For service under 5 years: mainland and DIFC are identical For service 5–8 years: mainland is better (30 days/yr vs DIFC's 21 days/yr) For very long service (15+ years): DIFC no-cap benefit could eventually outweigh the lower daily rate Example at AED 30,000 basic, 10 years: Mainland: (21×5 + 30×5) × (30,000÷30) = 255 × 1,000 = AED 255,000 DIFC: 21 × 10 × 1,000 = AED 210,000 → Mainland gives AED 45,000 MORE Example at AED 30,000 basic, 20 years: Mainland: capped at 24 × 30,000 = AED 720,000 DIFC: 21 × 20 × 1,000 = AED 420,000 (no cap needed) → Mainland (at cap) gives AED 300,000 MORE Note: Some DIFC employers offer additional contractual gratuity above the statutory minimum. ADGM (Abu Dhabi Global Market) follows the same formula as mainland UAE (21 days → 30 days, 2-year cap) under its own Employment Regulations. If you work in a DIFC company, your employment contract will specify DIFC law applies. Check your contract carefully.

Can my employer deduct from my gratuity?

UAE law allows limited deductions from gratuity, but strict rules apply. Legally permitted deductions: 1. Outstanding loans/advances from the employer given to the employee (amount owed at date of termination) 2. Amounts owed by employee to employer for damages caused by the employee's negligence or breach of duties 3. Court-ordered deductions NOT permitted deductions: ✗ Performance-based penalties (unless specifically allowed in contract) ✗ Arbitrary deductions for 'losses' without proving the employee caused them ✗ Notice period payment in lieu (this is a separate obligation) Maximum deduction in a single pay period: Deductions cannot exceed 50% of a month's salary (except for court-ordered deductions) Important: Even if you have outstanding rent from employer accommodation, this can only be deducted if explicitly stated in your contract. Gratuity cannot be waived: Under Article 53 of the UAE Labour Law, employees cannot waive their right to gratuity even if they signed such a document. Any clause in an employment contract that purports to reduce gratuity below the statutory minimum is void. If your employer withholds gratuity: 1. File a complaint with MoHRE (Ministry of Human Resources & Emiratisation) 2. File online at mohre.gov.ae or via the MOHRE app 3. For DIFC employees: contact DIFC Employment Disputes Tribunal 4. Small claims limit for MoHRE conciliation: AED 50,000 5. Cases above AED 50,000 are referred to the courts Deadline: Must file within 1 year from the date the gratuity was due.

UAE END OF SERVICE GRATUITY CALCULATOR

Calculate UAE end of service gratuity under Federal Decree-Law No. 33 of 2021 (new labour law effective 2 Feb 2022). Formula: basic salary ÷ 30 × gratuity days. Days: 21 per year for first 5 years, 30 per year thereafter. Cap: 2 years basic salary (24 months). Supports Mainland UAE, DIFC (21 days/yr...

GRATUITY CALCULATOR

Jurisdiction

Monthly Basic Salary (AED)Basic only — not total package

Basic salary is typically 40–60% of total monthly package. Check your employment contract.

Years of Service

Additional Months

END OF SERVICE GRATUITY

AED 52,500

DAILY RATE

AED 500

TOTAL DAYS

105.0

SERVICE

5.00 yrs

Year 1–5(5 yrs × 21 days)105.0 days

Total105.0 days × AED 500

GRATUITYAED 52,500

LIVE DIAGRAM

END OF SERVICE GRATUITY

AED 52,500

105.0 days × AED 500/day · 5.00 years service

GRATUITY GROWTH BY YEAR

FORMULA

AED 15,000 ÷ 30 × 105.0 days

= AED 500/day × 105.0 days = AED 52,500

UAE Labour Law · Federal Decree-Law No. 33 of 2021 · Approximate

Created with❤️byeaglecalculator.com

UAE GRATUITY RULES AT A GLANCE

Rule	Mainland UAE (2022 Law)	DIFC	ADGM
Minimum service	1 year continuous	1 year continuous	1 year continuous
Basis	Last basic salary	Last basic salary	Last basic salary
Years 1–5 rate	21 days per year	21 days per year	21 days per year
Years 5+ rate	30 days per year	21 days per year	30 days per year
Maximum	2 years basic (24 mo)	No cap	2 years basic
Resignation vs fired	Same (post-2022 law)	Same	Same
Part-year service	Pro-rated by months	Pro-rated	Pro-rated
Daily rate method	Monthly ÷ 30	Monthly ÷ 30	Monthly ÷ 30
UAE nationals	GPSSA pension (separate)	GPSSA or gratuity	GPSSA or gratuity

HOW TO USE

1
Select your jurisdiction — Mainland UAE (Federal Decree-Law No. 33 of 2021: 21 days/yr for first 5 years, 30 days/yr thereafter, capped at 2 years' basic), DIFC (Dubai International Financial Centre: 21 days/yr for all years, no cap), or ADGM (Abu Dhabi Global Market: same as mainland). Enter your monthly BASIC salary — not your total package. Basic is typically 40–60% of total; check your employment contract.
2
Enter your years and additional months of completed service. The minimum qualifying period is 1 year of continuous service — any service under 1 year receives no gratuity. Results show: daily rate (basic ÷ 30), total gratuity days, and final gratuity amount with a step-by-step breakdown showing the 21-day and 30-day bands applied separately.
3
Switch to Year-by-Year Schedule to see the exact gratuity accumulation for each year of service — useful for negotiating resignation dates to maximise gratuity. Switch to Salary Comparison for a pre-computed table of gratuity amounts across 9 common salary levels and 9 service durations (1 to 20 years), with the 2-year cap highlighted in orange.

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UAE End of Service Gratuity Calculator · Federal Decree-Law No. 33 of 2021 · For guidance only — actual entitlement may vary based on contract terms, absences, and applicable law. Consult a UAE-licensed legal professional for personal advice.