UAE end-of-service gratuity: formula and worked examples

A full-time foreign employee with at least one year of continuous service gets 21 days of basic wage for each of the first five years and 30 days for each year after that. The total cannot exceed two years' wage. The employer pays it, with the employee's other dues, within 14 days of the contract ending.

The rule is Article 51 of Federal Decree-Law No. 33 of 2021, the UAE labour law for the private sector. It took effect on 2 February 2022. Gratuity is one part of a leaver's final pay; for the monthly side of UAE payroll, see our complete guide to WPS payroll.

Who gets gratuity

• Full-time foreign employees with at least one year of continuous service.
• Not UAE nationals. A national's end-of-service benefits follow the pensions and social security law instead.
• Not employees under one year. Someone who leaves after 11 months has no gratuity under Article 51.

Two other cases need care. If someone works part-time or on another flexible work model, check how the law applies to that model before you use the formula below. And if your company has joined the voluntary alternative end-of-service scheme under Cabinet Resolution No. 96 of 2023, that scheme's rules apply instead.

The formula

Gratuity = (21 days × years 1 to 5 + 30 days × each year after 5) × the daily basic wage, up to two years' wage.

Five rules sit behind that line:

1. Basic wage only. The gratuity is based on the last basic wage, without housing, transport or other allowances.
2. The last basic wage. Use the basic wage at the end of service, not an average.
3. Part years count after the first year. Once the employee has completed one year, a part year is paid in proportion to the time worked.
4. Unpaid absence does not count. Days of unpaid absence are taken out of the length of service.
5. Deductions are limited. The employer may deduct only amounts due under the law or a court judgment.

One thing the text does not settle for you: the daily rate. The text we checked does not say how to turn a monthly wage into a daily one. Ask your legal adviser or the Ministry of Human Resources and Emiratisation (MOHRE) which method applies, and use the same one every time. The examples below divide the monthly basic wage by 30, for illustration only.

Three worked examples

All figures are examples. The daily rate is the monthly basic wage divided by 30.

Example 1: short service

Sara earns a basic wage of AED 6,000 a month. Her daily rate is AED 200.

• If she leaves after 11 months: no gratuity.
• If she leaves after 1 year and 6 months: 1.5 years × 21 days = 31.5 days. 31.5 × AED 200 = AED 6,300.

Example 2: six years, then unpaid leave

Omar earns a basic wage of AED 10,000. His daily rate is AED 333.33. He leaves after exactly six years.

135 days × AED 333.33 = AED 45,000.

Now suppose Omar took 73 days of unpaid leave during those six years. That is a fifth of a year, so his service counts as 5.8 years. The days become 105 + (0.8 × 30) = 129. 129 × AED 333.33 = AED 43,000.

Example 3: a salary change

Huda worked for eight years. Her basic wage was AED 8,000 for six years and then rose to AED 12,000. Article 51 uses the last basic wage, so her daily rate is AED 400.

• Days: 105 for the first five years, plus 3 × 30 = 90 for years six to eight. Total 195 days.
• Gratuity: 195 × AED 400 = AED 78,000.

If someone used her old wage of AED 8,000 by mistake, the result would be AED 52,000, an underpayment of AED 26,000.

The two-year cap

The total cannot exceed two years' wage. It only matters for long service. With a basic wage of AED 10,000 and the divide-by-30 method, the uncapped gratuity first passes 24 months' wage at about 25 and a half years of service.

For example, 27 years of service gives 105 + (22 × 30) = 765 days. That is AED 255,000 before the cap. Two years of basic wage is AED 240,000, so the payment stops there.

Article 51 says "two years' wage", while the gratuity itself is calculated on the basic wage. The examples here, and our own calculator, apply the cap to the basic wage. If an employee is near the cap, ask your adviser how the cap should be read for your contracts.

Common mistakes

• Adding allowances. Housing and transport stay out.
• Counting unpaid leave as service. Take those days out first.
• Using an old salary or an average. Use the last basic wage.
• Using a template written for the previous labour law. The Article 51 text we checked uses the same formula however the contract ends and sets no reduction for resignation. Get legal advice for unusual cases.
• Forgetting leave. Unused annual leave is paid separately, in cash, based on the basic wage.
• Paying late. See the next section.

When to pay

Article 53 says the employer pays the worker's wages and all other dues within 14 days of the end of the contract. Plan the final settlement before the last working day, not after it.

How Tarleaks helps

Tarleaks Payroll quotes the end-of-service benefit for any contract and leaving date, showing the 21-day and 30-day tiers and the cap. For the UAE it uses basic pay, divides the monthly basic by 30 and caps at 24 months of basic, so you can compare it with your adviser's reading. A settlement quote adds unused leave, notice pay, the final month's days and any loan balance. HR shows the estimate on the leaver's profile.

What to do next

• Write down your company's daily-rate method and cap reading, and get your adviser to sign them off.
• Check your next three leavers against the examples above.
• Building your month-end routine? Use the checklist in our Wage Protection System guide.
• Running payroll in Saudi Arabia too? The rules there differ: see Saudi payroll in 2026.
• Comparing payroll software? Ask every vendor to calculate gratuity on your real contracts: 15 questions for the demo.
• Book a demo to see the calculator with sample data.

Questions people ask

How is gratuity calculated in the UAE?

A full-time foreign employee with at least one year of continuous service gets 21 days of basic wage for each of the first five years and 30 days for each year after that. The total cannot exceed two years' wage.

Are allowances included in UAE gratuity?

No. The gratuity is based on the last basic wage, without housing, transport or other allowances.

When must gratuity be paid?

Within 14 days of the end of the contract, together with the employee's other dues, under Article 53 of Federal Decree-Law No. 33 of 2021.

Does an employee who resigns get less gratuity?

The Article 51 text we checked uses the same formula however the contract ends and sets no reduction for resignation. Get legal advice for unusual cases.

---

General information, not legal advice. Checked against the official sources listed on this page on 8 October 2026. For a real leaver, confirm the figures with MOHRE or your legal adviser.