How is End-of-Service Gratuity Calculated in UAE?
End-of-service gratuity (EOSB) is a statutory payment that every employer in the UAE must provide to employees upon completion of their employment. Under the UAE Labour Law (Federal Decree-Law No. 33 of 2021), gratuity is calculated based on the employee's basic salary — excluding allowances, bonuses, and commissions.
The calculation depends on three key factors: the length of service, the type of contract (limited or unlimited), and the reason for leaving (resignation, termination, or end of contract).
Example: An employee earning AED 10,000 basic salary who worked for 7 years and was terminated would receive: 5 years × 21 days × (10,000/30) = AED 35,000 for the first 5 years, plus 2 years × 30 days × (10,000/30) = AED 20,000 for the remaining 2 years. Total: AED 55,000.
UAE Gratuity Law 2026 — Key Points
- • Minimum 1 year of continuous service is required to qualify for gratuity
- • Gratuity is based on the last drawn basic salary only
- • First 5 years: 21 calendar days' salary per year of service
- • Beyond 5 years: 30 calendar days' salary per year of service
- • Total gratuity cannot exceed 2 years' (24 months') salary
- • Employer must pay within 14 days of contract termination
- • Applies to all employees in the private sector (including free zones following UAE Labour Law)
- • Under the new law, all contracts are considered fixed-term (limited)
Limited vs Unlimited Contract Gratuity
| Criteria | Limited Contract (Resignation) | Unlimited / Termination / End of Contract |
|---|---|---|
| Less than 1 year | No gratuity | No gratuity |
| 1–3 years | 1/3 of 21 days' salary per year | Full 21 days' salary per year |
| 3–5 years | 2/3 of 21 days' salary per year | Full 21 days' salary per year |
| 5+ years | Full 21 days' salary per year | 21 days (first 5 yrs) + 30 days (remaining) |
When Are You NOT Entitled to Gratuity?
- ✕ Less than 1 year of continuous service
- ✕ Dismissed under Article 44 (gross misconduct — e.g., fraud, assault, theft)
- ✕ Employee abandons their position without valid reason during the notice period
- ✕ Domestic workers and certain free zone employees under separate regulations
حساب مكافأة نهاية الخدمة في الإمارات
مكافأة نهاية الخدمة هي حق قانوني لكل موظف في القطاع الخاص بدولة الإمارات العربية المتحدة. يتم احتساب المكافأة على أساس الراتب الأساسي فقط، دون احتساب البدلات أو العمولات.
آلية الاحتساب: أجر 21 يوماً عن كل سنة من السنوات الخمس الأولى، وأجر 30 يوماً عن كل سنة إضافية. الحد الأقصى للمكافأة هو أجر سنتين (24 شهراً).
يشترط إتمام سنة واحدة على الأقل من الخدمة المستمرة للحصول على المكافأة. استخدم الحاسبة أعلاه لمعرفة مكافأتك بدقة.
Frequently Asked Questions
How is gratuity calculated in UAE? +
UAE gratuity is calculated based on the employee's basic salary, length of service, contract type, and reason for leaving. For the first 5 years, it's 21 days' basic salary per year. Beyond 5 years, it's 30 days' basic salary per year. The total is capped at 2 years' total salary.
What is the minimum service period for gratuity in UAE? +
An employee must complete at least 1 year of continuous service to be eligible for end-of-service gratuity in the UAE.
Is gratuity calculated on basic salary or total salary? +
Gratuity in the UAE is calculated based on the basic salary only, not including allowances, bonuses, or other benefits.
What is the maximum gratuity in UAE? +
The maximum end-of-service gratuity in the UAE is capped at 2 years' (24 months') total wages/salary.
Do I get gratuity if I resign in UAE? +
Yes, you are entitled to gratuity if you resign after completing 1 year of service. However, on a limited contract, the gratuity amount may be reduced based on your length of service (1/3 for 1-3 years, 2/3 for 3-5 years, full for 5+ years).
What is the difference between limited and unlimited contract gratuity? +
Under the new UAE Labour Law (2022), all contracts are fixed-term (limited). For resignations on limited contracts, gratuity is reduced: 1/3 for 1-3 years, 2/3 for 3-5 years, and full amount for 5+ years. Termination or end of contract entitles full gratuity regardless of contract type.
Is gratuity taxable in UAE? +
No, end-of-service gratuity is not taxable in the UAE as the country does not impose personal income tax.
When should gratuity be paid after termination? +
Under UAE Labour Law, the employer must settle all dues including gratuity within 14 days from the date of contract termination.