UAE Gratuity Calculator: How to Calculate Your End of Service Benefits

Most workers in the UAE are owed more gratuity than they realise — and many leave the country without claiming it at all. The formula is simpler than it looks once you understand the one figure that drives everything: your basic salary, not your total package.

This guide breaks down the UAE gratuity calculation under Federal Decree-Law No. 33 of 2021, which became fully effective in February 2022 and simplified how end-of-service benefits are calculated.

How UAE Gratuity Is Calculated

Gratuity is based entirely on your basic salary — excluding housing allowance, transport allowance, and any other components. This makes the salary structure on your contract one of the most financially important decisions you will make when accepting a UAE job offer.

The formula under the current law:

• Years 1 to 5: 21 days of basic salary per year of service
• Beyond 5 years: 30 days of basic salary per year (for those additional years)
• Maximum cap: Total gratuity cannot exceed two years' total salary (basic plus allowances)

Worked Example

Say your monthly basic salary is AED 10,000 and you have worked for three years:

1. Daily basic salary = AED 10,000 ÷ 30 = AED 333.33
2. Gratuity = 21 days × 3 years × AED 333.33 = AED 21,000

For someone with seven years of service at the same basic salary:

• First 5 years: 21 days × 5 × AED 333.33 = AED 35,000
• Years 6 and 7: 30 days × 2 × AED 333.33 = AED 20,000
• Total: AED 55,000

The MOHRE gratuity calculator on the official government portal (u.ae) can verify your figure, but the formula above is what it applies.

The Basic Salary Trap

The single most common way UAE employees lose gratuity is by having a low basic salary relative to their total compensation. An offer of AED 20,000 per month split as AED 5,000 basic + AED 10,000 housing + AED 5,000 transport results in gratuity calculated only on AED 5,000.

When negotiating your contract, try to maximise the basic salary component. A ratio of 60–70% basic to total package is reasonable. HR departments at many companies routinely structure packages the other way to reduce their gratuity liability — and it is entirely legal for them to do so.

What Changed Under the 2022 Law

The old Federal Law No. 8 of 1980 applied punitive reductions when an employee resigned before completing five years:

• Less than 1 year: no gratuity
• 1–3 years: one-third of gratuity entitlement
• 3–5 years: two-thirds of gratuity entitlement

The 2022 law removed all of these reductions. Provided you have completed at least one full year of continuous service, you receive full gratuity regardless of whether you resigned or were terminated. This was a significant change that many workers who previously lived in the UAE under the old rules are not aware of.

The one remaining restriction: gratuity is calculated on the final basic salary as of your last day. If your salary was recently reduced (for example during a restructuring), the lower figure applies.

Final Settlement: What Your Employer Must Pay

Gratuity is part of your final settlement (sometimes called the "end of service settlement"), which must also include:

• Outstanding salary for days worked in the final month
• Any unused annual leave (calculated at daily basic salary rate)
• Any overtime not yet paid
• Any accrued but unpaid allowances stated in the contract

By law, the employer must process the final settlement within 14 days of the last working day. Delays beyond this threshold can be reported to MOHRE.

Note that gratuity is reduced (but not eliminated) if you resign with less than the required notice period. In that case, the employer can deduct the days of short notice from the settlement.

How to Handle a Gratuity Dispute

If your employer disputes the calculation or refuses to pay, the process is:

1. File a complaint through the MOHRE Smart App or website (600-590000)
2. A MOHRE labour officer will contact both parties within 14 days to mediate
3. If unresolved, the case goes to the Labour Court

For claims under AED 50,000, the Minor Claims division handles the case on an accelerated basis. The evidence you need is simple: your labour contract showing basic salary, a record of your start and end dates, and any payslips showing the salary structure.

Keep copies of all these documents before you leave the UAE. Once you have exited the country and your visa is cancelled, retrieving this paperwork becomes far more difficult.

When Gratuity Is Forfeited

Gratuity can be reduced or forfeited if you are terminated for cause under Article 44 of the 2021 Labour Law. Grounds include serious violations like revealing company secrets, causing intentional damage to property, or assaulting a colleague. For a routine termination — including redundancy or poor performance — your full gratuity entitlement applies.

An employer cannot simply write "gross misconduct" on a termination letter to escape gratuity. They must follow the specific grounds and process in Article 44, and employees can challenge wrongful termination at MOHRE.

The UAE Employment Visa Guide covers gratuity calculation in detail alongside everything else you need to know before you arrive — from the medical test to family sponsorship thresholds. The complete guide includes a gratuity worksheet and salary negotiation checklist so you know exactly what you are owed before you sign.

See more UAE guides →