UAE Gratuity Calculator
Work out the end-of-service gratuity owed to an employee in the UAE. Enter the monthly basic salary, years of service and reason for leaving to see the amount, with the daily rate, the 21- and 30-day rates and the 2-year cap, under current law.
- UAE Labour Law: Federal Decree-Law No. 33 of 2021
- Effective 2 February 2022
- Gratuity: Article 51
The employee
Basic salary only: housing, transport and other allowances are not included.
In half-year steps, or type any amount.
Under current law the reason for leaving doesn't change the amount.
Housing, transport and other cash allowances. They don't change the gratuity, only the 2-year cap.
Rates: 21 days/yr for the first 5 years, 30 days/yr after 5 years, max gratuity capped at 2 years' wage. For estimation only.
Results
Paid once, at the end of service
- First 5 years, 21 days a year
| Daily rateSalary / 30 | AED 500.00 |
|---|---|
| Years of service | 3 years |
| First 5 years21 days × 3 years | AED 31,500 |
| Base gratuity | AED 31,500 |
| Reason for leavingEmployer termination | No reduction |
| Final gratuity | AED 31,500 |
Based on basic salary only, for continuous service with the same employer. See how each figure is worked out.
The rules that apply
Employer termination
- Minimum service
- 1 yearMet
- Rate
- 21 days/year for the first 5 years, 30 days/year after
- Reason for leaving
- Full gratuity, no reduction
- Salary used
- Basic salary only
- Cap
- AED 360,000 (24 months’ wage)
- Paid within
- 14 days of the final working day
- Tax
- None
- Months of basic salary
- 2.1
- Share of the 2-year cap
- 9%
Hire through RecruitGo
No trade license needed. We employ them for you.
- First 5 years21 days a year, 5.83%
- AED 875
- After year 530 days a year, 8.33%
- AED 1,250
- RecruitGo EOR feePer employee per month
- 15%, min $99
- Gratuity provisioned monthly and settled on separation
- Contracts under Federal Decree-Law No. 33 of 2021, registered with MoHRE
- WPS payroll in AED, visa sponsorship and health insurance handled
How it is computed
How this gratuity was worked out
Each figure above, worked out from a monthly basic salary of AED 15,000 and 3 years of service, for employer termination.
Daily rate
- Monthly basic salary AED 15,000 ÷ 30 = AED 500.00 a day.
- It is always divided by 30, regardless of the actual number of days in the month.
- Only the basic salary is used: allowances such as housing, transport, and bonuses are not included unless the employment contract specifies otherwise.
Source: Federal Decree-Law No. 33 of 2021, Article 67: a month counts as 30 days.
First 5 years
- 21 days' basic salary for each year: 21 × AED 500.00 = AED 10,500 a year.
- × 3 years = AED 31,500.
Source: Federal Decree-Law No. 33 of 2021, Article 51: 21 days a year for the first 5 years.
After 5 years
- From year 6, each year earns 30 days' basic salary: AED 15,000 a year at this salary.
- Not reached: 3 years of service.
Source: Federal Decree-Law No. 33 of 2021, Article 51: 30 days a year after 5 years.
Reason for leaving
- Employer termination: full gratuity, with no reduction for the reason for leaving.
- The full base gratuity is due: AED 31,500.
- With employer termination, full gratuity is due at every length of service from 1 year.
Source: Federal Decree-Law No. 33 of 2021, Article 51: no reduction for resignation or dismissal.
The 2-year cap
- Maximum: 2 years' wage, 24 × AED 15,000 = AED 360,000.
- Wage here includes allowances. With none entered, the cap is 24 months of basic salary.
- This gratuity is 9% of the cap, so the cap doesn't apply.
Source: Federal Decree-Law No. 33 of 2021, Article 51: capped at 2 years’ wage.
Tax and payment
- The UAE does not impose personal income tax, so the full AED 31,500 is paid without any tax deductions.
- Employers can choose the voluntary end-of-service savings scheme instead; the traditional gratuity system remains the default.
- Our guide for employers hiring in the UAE covers WPS payroll and the other end-of-service steps.
Source: No personal income tax in the UAE, so gratuity is paid in full.
Legal Reference
UAE Gratuity Law — Federal Decree-Law No. 33 of 2021
The UAE's Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (effective February 2, 2022) governs end-of-service gratuity for private sector employees. Gratuity is calculated based on the employee's basic salary and length of service. The reason for leaving no longer changes the amount: an employee who resigns, or is dismissed under Article 44, receives the same gratuity as one whose contract the employer ends.
Expatriate employees have no pension or social security system in the UAE, so gratuity is the main benefit an employer pays when they leave. Because it is calculated on basic salary only, the split between basic salary and allowances in a contract directly affects it, as our guide to the cost of hiring employees in the UAE explains.
| Years of Service | Gratuity Rate | Termination or Resignation |
|---|---|---|
| Less than 1 year | None | No entitlement |
| 1 to 5 yearsYours | 21 days/year | Full gratuity, part years pro rata |
| Over 5 years (first 5) | 21 days/year | Full gratuity |
| Over 5 years (after year 5) | 30 days/year | Full gratuity |
Highlighted: the row for 3 years of service, from the calculator.
Eligibility
Full-time employees must complete at least 1 year of continuous service with the same employer to qualify for end-of-service gratuity. After that, part years count pro rata.
Cap
The total gratuity cannot exceed 2 years’ wage, regardless of the length of service. Wage here is basic salary plus allowances, although the gratuity itself is worked out on basic salary.
New Law
Federal Decree-Law No. 33 of 2021 took effect on 2 February 2022 and also covers contracts signed before then. Employers had until 31 December 2023 to convert unlimited contracts to fixed-term ones, after Ministerial Resolution No. 27 of 2023 extended the original one-year deadline.
If you employ staff through an Employer of Record in the UAE, gratuity is provisioned monthly and paid on separation, alongside WPS payroll, visa sponsorship and health insurance. Our overview of hiring in the UAE covers the other employer costs, and the Pakistan gratuity calculator does the same job for employees in Pakistan, where gratuity is 30 days' wages for each year of service in most provinces.
Frequently Asked Questions
About end-of-service gratuity in the UAE
Under Article 51 of Federal Decree-Law No. 33 of 2021, a full-time employee must complete at least one full year of continuous service to be eligible for end-of-service gratuity. After that, part years count pro rata. Days of absence without pay are not included in the calculation of the service period.
No. Under the old law (Federal Law No. 8 of 1980), an employee who resigned with less than 5 years of service lost part or all of their gratuity, and one dismissed for gross misconduct lost all of it. Federal Decree-Law No. 33 of 2021 dropped both rules. Since 2 February 2022, the full gratuity is due whether the employee resigns, the employer ends the contract or the employee is dismissed under Article 44, as long as they have completed one year of continuous service. The employer can deduct amounts the employee owes under the law or a court judgment.
The daily salary for gratuity calculation is determined by dividing the employee’s monthly basic salary by 30, regardless of the actual number of days in the month. Only the basic salary is used — allowances such as housing, transport, and bonuses are not included unless the employment contract specifies otherwise.
The total end-of-service gratuity cannot exceed two years’ wage (Article 51 of Federal Decree-Law No. 33 of 2021). The law defines wage as the basic salary plus the cash allowances and benefits in the contract, so the cap is 24 months of the full monthly wage, not only the basic salary. The gratuity itself is worked out on basic salary, so the cap only applies after about 25 and a half years of service, or later if the employee receives allowances. If the calculated gratuity exceeds the cap, the employee receives the capped amount instead.
In most free zones, such as JAFZA, yes: the federal Labour Law applies, so the same gratuity rules as this calculator. The two financial free zones have their own employment laws. In DIFC, end-of-service gratuity was replaced from 1 February 2020 by DEWS (the DIFC Employee Workplace Savings plan), into which employers pay 5.83% of basic salary a month (8.33% after 5 years of service); gratuity earned before then is kept. ADGM has its own Employment Regulations 2024, which also pay 21 and 30 days of basic wage a year but work out the daily rate over 365 days and let employers offer a pension or savings scheme instead. Always check the specific free zone regulations that apply to your employment.
No. The UAE does not impose personal income tax, so end-of-service gratuity payments are not subject to tax. Employees receive the full calculated gratuity amount without any tax deductions.
The UAE introduced an alternative end-of-service savings scheme (Cabinet Resolution No. 96 of 2023, in force since 1 November 2023) as a voluntary option for employers. Under this scheme, employers pay a monthly contribution of 5.83% of basic salary (8.33% once the employee has more than 5 years of service) into an approved investment fund instead of paying a lump-sum gratuity at termination. Employees receive the contributions plus any investment returns when they leave. The traditional gratuity system remains the default.
