How to calculate end of service gratuity in the UAE

The formula is set by federal law. A foreign employee who has completed at least one continuous year earns 21 days of basic wage for each of the first five years, and 30 days of basic wage for every year after that. It is calculated on basic wage alone, and the total can never exceed two years of pay.

Basic wage is the key word. Allowances for housing, transport and the rest are excluded, so gratuity is usually smaller than people expect from their total package.

The foreign full-time Worker, who has completed one or more years of continuous service, is entitled to an end-of-service gratuity upon the end of his service, calculated according to the basic wage, as follows: a. The wage of twenty-one (21) days for each year of the first five years of service. b. The wage of thirty (30) days for each year in excess of that.

Federal Decree-Law No. 33 of 2021, Article 51, UAE Legislation portal

Part years count too, in proportion to the time worked, once the first full year is behind you. Days of unpaid absence are left out of the service period. Your employer has 14 days from the end of the contract to pay the gratuity along with everything else owed.

What this does not mean

These rules cover full time work in the private sector. UAE nationals are handled through the pensions and social security system instead, other working patterns are set by the executive regulations, and an employer may deduct amounts owed by law or by a judgment. A calculator, ours included, is an estimate rather than a settlement.

To try the numbers, use our UAE gratuity calculator.

Sources: Federal Decree-Law No. 33 of 2021, Articles 51 and 53, on the UAE Legislation portal (rates, basic wage, part years, unpaid absence, the two year cap, the 14 day payment deadline).