How UAE Gratuity (End-of-Service Benefits) Works
Gratuity, also called the End-of-Service Benefit (EOSB), is a statutory lump-sum payment owed to eligible private-sector employees when their employment ends, under Federal Decree-Law No. 33 of 2021. It's designed as a form of retirement/severance benefit, calculated using your final basic salary and total length of continuous service — not your gross salary, and not a discretionary bonus from your employer.
📝 The Formula, Step by Step
| Step | Calculation |
|---|---|
| 1. Daily wage | Basic monthly salary ÷ 30 |
| 2. First 5 years | 21 days' wage × years of service (up to 5) |
| 3. Beyond 5 years | 30 days' wage × each additional year |
| 4. Maximum cap | Total cannot exceed 24 months' (2 years') basic salary |
Once you've completed at least 1 year of continuous service, any additional part-year is paid on a pro-rata basis — for example, 4 years and 6 months earns 4.5 years' worth of gratuity, not just 4 full years.
📝 Eligibility & What Counts as Service
You need at least 1 year of continuous service with the same employer to qualify (except if you die during employment, when the minimum doesn't apply). Unpaid leave days are deducted from your qualifying service period — they don't count toward your years of service. Maternity leave, even partly unpaid, is generally still counted. Your service period runs from your actual start date to your last working day, not your visa cancellation date.
📝 Resignation vs. Termination
Before February 2022, employees on unlimited contracts who resigned before 5 years received a reduced payout — as low as one-third for 1–3 years of service, two-thirds for 3–5 years. This reduction has been abolished. Under current law, resignation and employer-initiated termination are treated identically — you receive the full calculated gratuity once you've completed 1 year of service and served any required notice. If a calculator or advisor still applies the old one-third/two-thirds reduction, it's using repealed rules.
💡 Example Calculation
Scenario: AED 12,000 basic salary, 6 years 6 months of continuous service, no unpaid leave.
1. Daily wage: AED 12,000 ÷ 30 = AED 400
2. First 5 years: 21 days × 5 × AED 400 = AED 42,000
3. Remaining 1.5 years: 30 days × 1.5 × AED 400 = AED 18,000
4. Total gratuity: AED 42,000 + AED 18,000 = AED 60,000
5. Cap check: 2 years' basic salary = AED 288,000 — well above AED 60,000, so no cap applies.
Note: This is a simplified example. Your actual final settlement may include unused leave payout, notice pay, and other adjustments not covered here.
⚠️ Important Notes
- This calculator provides estimates only, based on Federal Decree-Law No. 33 of 2021 and current MOHRE guidance.
- It applies to standard private-sector expatriate employees — UAE nationals are covered by the separate GPSSA pension system instead.
- It does not include unused annual leave payout, notice period pay, or other final settlement items — only the core gratuity calculation.
- Domestic workers follow a different, simpler formula (one month's salary per year of service) under Federal Decree-Law No. 9 of 2022.
- Some employers use the Voluntary Alternative End-of-Service Benefits Savings Scheme instead of the standard formula — check your contract.
- For official guidance, see the Ministry of Human Resources and Emiratisation (MOHRE).