UAE End-of-Service Gratuity Guide 2026: Formula, Worked Examples and How to Claim
For most expatriates in the UAE private sector, the end-of-service gratuity is the largest single payment they receive when a job ends. The rules are short: they sit in Articles 51 to 53 of Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships and in Article 30 of its Executive Regulations (Cabinet Resolution No. 1 of 2022). This guide walks through the formula with figures you can check yourself, then covers the points that most often cause disputes.
Who is entitled?
Article 51 separates two groups:
- Foreign workers. A foreign worker who works full time and has completed one year or more of continuous service is entitled to a gratuity when the service ends (Article 51, clause 2).
- UAE nationals. Their end-of-service entitlement follows the legislation on pensions and social security (Article 51, clause 1). In practice a national’s rights are assessed by the pension authority, not by the formula below.
The law does not make the gratuity depend on who ended the contract. A worker who resigns after completing a year is entitled to the same amount as one whose employer ended the contract.
The formula
- Daily wage = monthly basic wage ÷ 30.
- First five years: 21 days of basic wage for each year.
- Each year after the fifth: 30 days of basic wage.
- Part of a year is paid in proportion to the time worked, provided the first year has been completed.
- Cap: the total cannot exceed two years of wage.
Put differently, each of the first five years is worth 70% of one month’s basic wage (21 ÷ 30), and each later year is worth one full month. This is how the gratuity calculator on this site works.
Which wage counts?
The gratuity is calculated on the last basic wage. The law defines basic wage as the wage stated in the employment contract in return for the work, excluding allowances and benefits in kind. Housing, transport and phone allowances are therefore left out. For a worker paid by piece, the daily average wage is used.
Worked examples
Example 1: 7 years, basic wage AED 10,000
- Daily wage: 10,000 ÷ 30 = AED 333.33
- First five years: 333.33 × 21 × 5 = AED 35,000
- Next two years: 333.33 × 30 × 2 = AED 20,000
- Gratuity: AED 55,000
Example 2: 3 years and 6 months, basic wage AED 8,000
- Daily wage: 8,000 ÷ 30 = AED 266.67
- All 3.5 years fall in the first tier: 266.67 × 21 × 3.5 = AED 19,600
Example 3: 11 months, basic wage AED 6,000
One year of continuous service has not been completed, so no gratuity is due.
Example 4: 6 years including 4 months of unpaid leave, basic wage AED 10,000
Days of absence without pay are not counted in the period of service (Article 51, clause 4), so the service counted is 5 years and 8 months.
- First five years: AED 35,000
- Eight months: 333.33 × 30 × (8 ÷ 12) = AED 6,666.67
- Gratuity: about AED 41,667, compared with AED 45,000 for six full years
Example 5: reaching the cap, 30 years, basic wage AED 12,000
- Daily wage: AED 400
- First five years: 400 × 21 × 5 = AED 42,000
- Next 25 years: 400 × 30 × 25 = AED 300,000
- Total AED 342,000, but the cap is two years of wage: 12,000 × 24 = AED 288,000
- Gratuity: AED 288,000
Quick table: gratuity in months of basic wage
| Service | Gratuity in months | How |
|---|---|---|
| Under 1 year | 0 | Not entitled |
| 1 year | 0.7 | 1 × 0.7 |
| 3 years | 2.1 | 3 × 0.7 |
| 5 years | 3.5 | 5 × 0.7 |
| 7 years | 5.5 | 3.5 + 2 |
| 10 years | 8.5 | 3.5 + 5 |
| 15 years | 13.5 | 3.5 + 10 |
| 20 years | 18.5 | 3.5 + 15 |
| 25 years and 6 months or more | 24 | Cap |
Multiply the figure by your monthly basic wage. The cap is reached at 25 and a half years, because the first five years give 3.5 months and the remaining 20.5 months take 20.5 years.
Table of amounts
| Service | Basic wage 5,000 | Basic wage 10,000 | Basic wage 20,000 |
|---|---|---|---|
| 1 year | 3,500 | 7,000 | 14,000 |
| 3 years | 10,500 | 21,000 | 42,000 |
| 5 years | 17,500 | 35,000 | 70,000 |
| 10 years | 42,500 | 85,000 | 170,000 |
| 15 years | 67,500 | 135,000 | 270,000 |
What can be deducted?
The employer may deduct from the gratuity any amounts owed by law or under a court judgment, subject to the conditions in the Executive Regulations (Article 51, clause 7). A deduction with no legal text, judgment or established debt behind it can be challenged.
Article 44, which lists the cases in which an employer may dismiss a worker without notice, contains no provision depriving the worker of the gratuity.
Part-time and other work patterns
Article 52 refers to the Executive Regulations, and Article 30 of Cabinet Resolution No. 1 of 2022 sets a proportional rule for part-time work, job sharing and other patterns that are not full time:
Share = hours of work in the contract per year ÷ hours of a full-time contract per year, multiplied by the full-time gratuity.
Example: a part-time worker whose annual contract hours are half of full-time hours, with a full-time-equivalent basic wage of AED 10,000 and 4 years of service.
- Full-time gratuity: 10,000 × 0.7 × 4 = AED 28,000
- Part-time gratuity: 28,000 × 50% = AED 14,000
No gratuity is due for temporary work lasting less than one year.
If your employer has joined the alternative savings scheme
Cabinet Resolution No. 96 of 2023 created a voluntary alternative to the gratuity. An employer who joins pays a monthly contribution into an investment fund in the worker’s name: 5.83% of basic wage for a worker with up to five years of service and 8.33% beyond five years. These rates are close to 21 and 30 days a year (5.83% × 12 = 69.96% of a month’s wage; 8.33% × 12 = 99.96%). When the relationship ends, the worker receives the contributions and their returns, and the employer still owes the gratuity for the period before joining the scheme.
Getting paid
- Deadline. The employer must pay the worker’s wages and all other entitlements within 14 days of the end of the contract (Article 53).
- What the final settlement includes. Wages up to the last working day, pay for unused annual leave (on basic wage), notice pay if notice was not served, the gratuity, and anything else due under the contract.
- If there is a dispute. A complaint goes first to the Ministry of Human Resources and Emiratisation, which issues a binding decision on claims of up to AED 50,000 and refers larger ones to court if no settlement is reached.
- Time limit. A claim for any right under the law is not heard after two years from the end of the employment relationship.
Common mistakes when checking a settlement
- Using total pay. If your basic wage is 6,000 and your total pay is 10,000, the gratuity is calculated on 6,000.
- Applying 30 days to every year once service passes five years. The first five years stay at 21 days however long the service.
- Dropping part-years. Extra months count in proportion once the first year is complete.
- Forgetting unpaid days. They are subtracted from the period of service, so check your record of unpaid leave.
- Using an old basic wage. The last basic wage applies to all the years of service.
Source: Articles 51 to 53 of Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships, Article 30 of its Executive Regulations (Cabinet Resolution No. 1 of 2022) and Cabinet Resolution No. 96 of 2023, as published on uaelegislation.gov.ae. This guide is for information and is not legal advice. Disputes are handled by the Ministry of Human Resources and Emiratisation: mohre.gov.ae.
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