How UAE gratuity is calculated
Under Article 51 of Federal Decree-Law No. 33 of 2021, a full-time foreign employee who completes at least one year of continuous service is entitled to:
- 21 days' basic salary for each of the first five years of service;
- 30 days' basic salary for each year after the fifth;
- pro-rata payment for any fraction of a year; and
- a total gratuity that cannot exceed two years' basic salary.
Daily wage = monthly basic salary ÷ 30. Days of unpaid leave are excluded from the service period. Allowances (housing, transport, etc.) are not included in the calculation.
Since the 2022 law all contracts are limited-term, and the old reductions for resigning from an unlimited contract (one-third / two-thirds) no longer apply — you receive the full accrued amount whether you resign or are terminated, unless you are dismissed for one of the gross-misconduct grounds in Article 44.
Formula
Worked example
Basic AED 10,000, 7 years' service: years 1–5 = 5 × 21 × (10,000 ÷ 30) = AED 35,000; years 6–7 = 2 × 30 × 333.33 = AED 20,000. Total AED 55,000 (below the AED 240,000 cap).
Legal basis: Federal Decree-Law No. 33 of 2021, Article 51.
Frequently asked questions
Is UAE gratuity calculated on basic salary or total salary?
Basic salary only. Housing, transport and other allowances are excluded by law, which is why employers often structure pay with a lower basic. Your contract and MOHRE-registered offer letter state the basic figure.
Do I get gratuity if I resign in the UAE?
Yes. Under the 2022 Labour Law you receive the full accrued gratuity whether you resign or are terminated, provided you have completed one year of service. The old one-third / two-thirds reductions applied only to unlimited contracts under the pre-2022 law.
What is the maximum gratuity in the UAE?
Two years' basic salary (24 × monthly basic). For example, a basic salary of AED 15,000 gives a maximum gratuity of AED 360,000 regardless of how long you worked.
Is gratuity payable if I worked less than one year?
No. One full year of continuous service is required. After that, fractions of a year are paid pro-rata.
Does unpaid leave count towards gratuity?
No. Days of unpaid leave are deducted from the service period before the calculation. Paid annual leave, sick leave and maternity leave do count.
When must my employer pay the gratuity?
Within 14 days of the end-of-service date, together with any other dues such as unused annual leave and notice-period pay.
Do DIFC and ADGM employees use this calculation?
No. DIFC employers contribute to the DEWS savings plan (5.83% / 8.33% of basic monthly) instead of paying a lump-sum gratuity, and ADGM has an equivalent scheme. Other free zones follow the federal law.
Can I be denied gratuity?
Only if you are dismissed for one of the specific gross-misconduct grounds in Article 44 (e.g. fraud, assault, serious breach), and even then this is frequently challenged in labour court.