UAE gratuity rules explained (2026)

Short answer: Under the UAE Labour Law, a private-sector employee earns end-of-service gratuity after one year of continuous service. It is 21 days of basic salary for each of the first five years and 30 days of basic salary for each year after that, with part years pro-rated. The daily wage is your basic salary divided by 30, allowances are not included, and the total is capped at two years' basic salary.

Who these rules apply to

The rules in this guide come from the UAE Labour Law, Federal Decree-Law No. 33 of 2021, which has been in force since 2 February 2022. It covers private-sector employees on the mainland. Most free zones, such as JAFZA and DMCC, follow it too.

There are some important exceptions:

• DIFC and ADGM. These financial free zones have their own employment laws. Instead of a lump sum calculated this way, employers pay into an end-of-service savings scheme. In the DIFC, this scheme is called DEWS.
• Government employees. Federal and local government staff follow their own pension and gratuity rules.

This guide is general information, not legal advice. Your contract, your HR team, MOHRE or a lawyer can confirm how the rules apply to your situation.

When you become eligible, and what counts as service

You need at least one year of continuous service with the same employer. If you leave before your first anniversary, there is no gratuity under the law.

Once you pass one year, part years count too. If you leave after three years and a few months, you are paid for the extra months as well, not just the three full years.

What counts as service

Gratuity is based on your length of continuous service, so it helps to know which days count.

• Annual leave counts as service.
• Sick leave counts as service.
• Unpaid leave does not. Those days are taken off your service, which slightly reduces the total.

If you have taken a long stretch of unpaid leave, use your actual service days rather than the dates on your contract when you estimate your gratuity.

How gratuity is calculated

The calculation has three parts: your daily wage, the number of days you have earned, and a cap.

1. Your daily wage

Gratuity is based on your basic salary only. Housing, transport and other allowances are not included, even when they make up a large part of your pay. Your contract or payslip will show the basic figure.

The law speaks in "days of wage". In practice, MOHRE, HR teams and calculators work out the daily wage as basic salary divided by 30.

2. The days you have earned

• 21 days of basic salary for each of the first five years.
• 30 days of basic salary for each year after the fifth.
• Part years are pro-rated by days. For example, 73 extra days is 73 ÷ 365 = 0.2 of a year.

3. The cap

The total cannot be more than two years' basic salary, which is 24 times your monthly basic.

Put together, the formula looks like this:

• Five years or less: basic ÷ 30 × 21 × years
• More than five years: basic ÷ 30 × (105 + 30 × (years − 5))
• Then take whichever is lower: that figure, or 24 × basic.

If you would rather not do the maths by hand, our free UAE gratuity calculator applies these rules for you. There is also an Arabic version of the gratuity calculator.

Days earned by years of service

This table shows how many days of basic salary you earn at different points. The last column turns days into months of basic salary (days ÷ 30), which is often easier to picture.

The cap is 720 days, or 24 months of basic salary. Twenty years of service earns 555 days, which is still below it. The cap only starts to matter after 25.5 years: 105 days for the first five years, plus another 615 days at 30 days a year, which takes a further 20.5 years.

Worked examples

Here are three more, all with a basic salary of AED 10,000 (a daily wage of AED 333.33):

• 3 years: 3 × 21 = 63 days. AED 10,000 × 63 ÷ 30 = AED 21,000.
• 3 years and 73 days: 3.2 × 21 = 67.2 days. AED 10,000 × 67.2 ÷ 30 = AED 22,400.
• 7 years: 105 + (2 × 30) = 165 days. AED 10,000 × 165 ÷ 30 = AED 55,000.

If your total monthly package is larger, say AED 16,000 with AED 6,000 of allowances, these figures do not change. Only the AED 10,000 basic counts.

Resigning, being let go, and company policies

Under the current law, resigning no longer reduces the gratuity the way it could under the old 1980 law. Under the old rules, an employee who resigned could receive only a third or two-thirds, depending on how long they had worked. If you read older articles or hear advice from colleagues, check whether it describes the rules before 2022.

Some employers pay more than the law requires. A company policy might, for example, pay 60 days a year after ten years. That is a company benefit, not a legal right, so it will be written in your contract or HR policy if it applies to you. The legal calculation is the minimum.

Gratuity is not a pension

For many people in the private sector, gratuity is the main lump sum they receive when a job ends. It is worth being realistic about it.

• It is paid when a job ends, not when you retire. If you move jobs every few years, each payout is small and the count starts again.
• It is based on basic salary only and it is capped, so it is often smaller than people expect.
• It is not a replacement for your own savings or an emergency fund.

A sensible approach is to budget as if gratuity did not exist, and treat it as a bonus when it arrives. Our guide on how to budget your salary in the UAE covers building savings from your monthly pay instead.

Keeping an eye on it in MoneyBook

MoneyBook, a free iPhone budgeting app, has a UAE gratuity card that counts up an estimate of your end-of-service gratuity every day, using the rules above. It sits next to your daily spending limit, so you can see both the money you have for today and the lump sum building in the background. Like the rest of the app, it needs no account and your data stays on your iPhone.

Do this automatically

MoneyBook keeps your gratuity up to date every day, right next to your spending. Free, private, no account.

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