End-of-service gratuity is one of the most valuable and most misunderstood entitlements for anyone working in the UAE. It is a lump sum your employer must pay you when you leave, based on how long you worked and your basic salary. This guide explains exactly how gratuity is calculated in 2026, who qualifies, and walks through a real worked example so you can estimate your own.
Who is eligible for gratuity?
Any employee on a UAE labour contract who completes at least one full year of continuous service is entitled to end-of-service gratuity. Since the UAE updated its labour law and removed unlimited contracts in 2023, the same calculation now applies to everyone, and you receive your full gratuity whether you resign or are terminated, as long as you have completed that first year.
How gratuity is calculated
The formula is based on your basic salary only — not your total package, and not housing, transport or other allowances. The rates are:
- First 1–5 years: 21 days of basic salary for each year of service.
- After 5 years: 30 days of basic salary for each additional year.
- Maximum cap: total gratuity cannot exceed 2 years basic salary.
- Partial years after the first year are paid pro-rata.
A worked example
Say you worked 8 years with a basic salary of AED 8,000. Here is how it breaks down:
| First 5 years | 21 × 5 = 105 days |
| Next 3 years | 30 × 3 = 90 days |
| Total days | 195 days |
| Daily wage | AED 8,000 ÷ 30 = AED 266.67 |
| Gratuity | 195 × 266.67 = AED 52,000 |
The key step people miss is that the daily wage is your monthly basic salary divided by 30, then multiplied by the number of gratuity days you have earned.
Important things to know
- Only basic salary counts. If your basic is a small part of a large package, your gratuity will be lower than you might expect — worth checking your contract.
- Resignation no longer reduces it. Under the current law, completing one year entitles you to full gratuity whether you resign or are let go.
- Unpaid leave does not count toward your years of service.
- Deductions for money you legitimately owe the employer can be taken from your gratuity.
- When it is paid: your end-of-service dues are generally due within 14 days of your last working day.
Frequently asked questions
Do I get gratuity if I resign?
Yes. As long as you have completed at least one year, you are entitled to full gratuity whether you resign or are terminated.
Is gratuity calculated on basic salary or total salary?
Basic salary only. Allowances such as housing and transport are not included.
What if I worked less than a year?
No gratuity is payable for under one year of continuous service.
Is there a maximum gratuity?
Yes — total gratuity is capped at two years basic salary, no matter how long you worked.
How soon must my employer pay it?
End-of-service entitlements are generally due within 14 days of your final working day.
Gratuity rules are set by UAE Federal Decree-Law No. 33 of 2021 and administered by MOHRE. Figures here are illustrative — confirm your exact entitlement via MOHRE (mohre.gov.ae). This article is general information, not legal advice.
