How to Calculate Gratuity in the UAE (2026)

Gratuity is 21 days of basic wage for each of your first five years and 30 days for each year after, once you have one full year of continuous service. The steps and examples below turn that into a number.

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The UAE gratuity formula

Gratuity is calculated on basic salary only. Divide it by 30 to get a daily wage, then multiply by 21 for each of your first five years and by 30 for each year after that. A foreign worker needs one full year of continuous service first.

The rule sits in Article 51 of Federal Decree Law No. 33 of 2021 on the regulation of labour relations (see the UAE labour law gratuity rules). It applies in every emirate, so there is no separate formula for Dubai, Abu Dhabi or Sharjah. The law says a month counts as 30 days and a year as 365 days (Article 67), which is why the daily wage is basic salary divided by 30. You can skip the arithmetic with the UAE gratuity calculator and come back here to check how it works.

How do I calculate gratuity in five steps?

Take your basic salary, turn it into a daily wage, count your service, apply 21 and 30 days, then check the cap. Each step below uses figures you can find on your contract and payslip.

1. Find your last monthly basic salary. Allowances, overtime, commission and bonuses are not part of it. Article 51(5) uses the last basic wage you were entitled to, so earlier salaries do not matter.
2. Divide it by 30 to get the daily wage. For AED 9,000 basic the daily wage is AED 300.
3. Count your service from your first working day to your last, in years and parts of years. Unpaid absence days are removed (Article 51(4)). Part years count in proportion once the first year is complete (Article 51(3)).
4. Multiply the daily wage by 21 for each year up to five, and by 30 for each year after that. Add the two parts.
5. Check the cap. Article 51(6) says the total must not exceed two years of wage. This site applies it as 24 months of basic salary. See the two year cap.

If your service is under one year, there is no gratuity under Article 51(2). Your salary, leave pay and other dues are still owed. See gratuity for less than one year for what applies.

Worked examples

These examples come from the same engine as the calculator. They are illustrations of the formula, not real cases.

For a ready table of every year from 1 to 30, see gratuity by years of service. For a case with leave and notice pay on top, use the final settlement calculator.

What counts as basic salary?

The Decree Law defines basic wage as the wage stated in the employment contract for the work, not including any other allowances or benefits in kind. The separate defined term "wage" adds cash allowances and benefits on top. Gratuity under Article 51(2) is calculated on the basic wage.

In practice that means housing, transport, food and phone allowances are out, along with bonuses and overtime. If your contract does not split basic from allowances, ask HR in writing which figure they treat as basic, because the whole result depends on it. The guide on allowances and basic salary covers the grey cases.

Common HR mistakes in a gratuity calculation

Most disputes come down to one wrong input rather than a different law. Check these before you challenge a figure.

• Using total salary instead of basic salary.
• Applying 30 days to every year instead of only the years after year five.
• Counting from the date of the labour card rather than your first working day.
• Ignoring part years, or rounding service down to whole years.
• Subtracting unpaid leave twice, or subtracting paid leave.
• Using an old basic salary rather than the last one.
• Deducting notice pay without a basis. Article 51(7) allows deductions of amounts payable under the law or a judgment, in line with the Implementing Regulation.

Our guide to a gratuity that looks short shows what each error costs, and the notice period deductions guide explains what can be taken from your dues.

Does resignation change the calculation?

No. Article 51 gives gratuity to a full time foreign worker with one year of continuous service, and the article does not tie it to the way the contract ended. Some older advice online describes a reduced gratuity for resignation under the previous labour law. It does not describe Decree Law 33 of 2021, which replaced that law in 2022.

Article 68 required old unlimited contracts to be converted to fixed term ones. Service from before 2022 can raise transition questions, so ask HR which rule they apply to those years. The resignation versus termination guide and the limited versus unlimited contract guide go through it.

Who does this formula not cover?

• UAE nationals: Article 51(1) sends them to pension and social security legislation.
• Domestic workers: covered by Federal Decree Law No. 9 of 2022. See the domestic worker gratuity calculator.
• DIFC employees: they use the DEWS savings scheme. See the DIFC gratuity calculator.
• ADGM employees: ADGM has its own employment regulations. See the ADGM gratuity calculator.
• Part time and other work patterns: Article 52 leaves the method to the Implementing Regulation.
• Employers in an approved alternative scheme under Article 51(8).

Other free zones, such as DMCC and JAFZA, have their own pages. The free zone and industry calculators hub compares them.

When is gratuity paid?

Article 53 requires the employer to pay wages and all other entitlements within 14 days of the end date of the contract. If that deadline passes, ask in writing, then submit a request to MOHRE under Article 54. The guide on how to file a MOHRE complaint walks through it, and the payment delay rules guide covers the 14 day deadline. Under Article 54(9), as amended in 2024, a claim is not heard after two years from the end of the employment relationship.

Important note

This page is general information based on official sources. It is not legal advice and does not replace your contract or a MOHRE decision. For a dispute, contact MOHRE or a UAE qualified employment lawyer.

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