How UAE End-of-Service Gratuity is Calculated
A complete guide to the UAE gratuity formula, worked examples, contract type differences, salary components, and MOHRE rules — based on Federal Decree-Law No. 33 of 2021.
What is UAE end-of-service gratuity?
End-of-service gratuity (مكافأة نهاية الخدمة) is a mandatory lump-sum payment that every UAE private sector employer must pay to an eligible employee when their employment ends. Governed by Article 51 of Federal Decree-Law No. 33 of 2021 and supervised by MOHRE, it is one of the most important financial entitlements for the UAE's 3.5 million+ expatriate workforce.
Gratuity applies whether the employee resigned, was terminated, or reached contract expiry — provided they have completed at least one full year of continuous service. It applies across all emirates: Dubai, Abu Dhabi, Sharjah, Ajman, Ras Al Khaimah, Fujairah, and Umm Al Quwain.
The official UAE gratuity formula
| Years of service | Entitlement | Formula |
|---|---|---|
| Less than 1 year | No entitlement | — |
| 1 – 5 years | 21 days per year | Daily wage × 21 × years |
| Beyond 5 years | 30 days per year (for years beyond 5) | (21×5) + (30× remaining years) |
| Maximum cap | 2 years' basic salary | 24 × monthly basic salary |
Worked example A — AED 15,000 salary, 8 years
Worked example B — AED 8,000 salary, 3 years (resignation)
عقد غير محدد المدة
Open-ended contracts with no fixed end date — the standard before the 2022 labour law reform.
- Full gratuity after 1+ year of service
- Resignation: full entitlement retained (2022 law)
- Termination: full entitlement applies
- 21 days/yr for years 1–5, 30 days/yr thereafter
عقد محدد المدة
Fixed-term contracts — all new UAE employment contracts since February 2022 are limited by law.
- Full gratuity on completion or termination
- Resignation: full gratuity if 1+ year served
- Same calculation formula as unlimited
- Employer may seek compensation for early exit
DIFC, ADGM, and free zone exceptions
Most UAE free zones (JAFZA, DMCC, DIC, Dubai Silicon Oasis, Sharjah Media City) follow the standard UAE labour law gratuity rules. However, two major financial free zones operate under separate frameworks.
DIFC — Dubai International Financial Centre
DIFC employees are covered by the DEWS (DIFC Employee Workplace Savings) scheme — a mandatory monthly employer contribution to investment funds, replacing traditional lump-sum gratuity.
ADGM — Abu Dhabi Global Market
ADGM operates under its own Employment Regulations 2019. End-of-service benefits may differ from mainland UAE calculations and should be verified with the ADGM HR authority directly.
Gratuity for part-time employees
Under Cabinet Resolution No. 1 of 2022, part-time employees working under a valid UAE employment contract are entitled to prorated gratuity based on contracted hours compared to a full-time role.
How UAE gratuity differs from Saudi Arabia
| Factor | UAE 🇦🇪 | KSA 🇸🇦 |
|---|---|---|
| Wage basis | Basic salary only | Actual wage (basic + allowances) |
| First 5 years | 21 days/year | Half month/year |
| After 5 years | 30 days/year | One full month/year |
| Resignation impact | No reduction — full gratuity | Tiered reductions (2–10 yrs) |
| Gratuity cap | 2 years (24 months) | No cap |
| Payment deadline | 14 days after last working day | Upon final settlement |