After 5 years working in the UAE on a basic salary of AED 10,000 per month, you are entitled to AED 35,000 in end-of-service gratuity. After 10 years, that rises to AED 95,000. Understanding your gratuity entitlement under UAE Labour Law is one of the most important financial steps before leaving any UAE job — and most employees are owed significantly more than they realise.
Use our free UAE End of Service Calculator — no login required — to calculate your exact gratuity based on your basic salary, years of service, and reason for leaving.
What is UAE End of Service Gratuity?
End-of-service gratuity (also called EOSB — End of Service Benefits) is a lump-sum payment that UAE employers are legally required to pay to eligible employees when their employment ends. It is governed by Federal Decree-Law No. 33 of 2021 (the UAE Labour Law) and enforced by the Ministry of Human Resources and Emiratisation (MOHRE).
Key facts about UAE gratuity:
- It applies to expatriate employees in the private sector (UAE nationals receive pension benefits instead)
- You must have completed at least 1 full year of continuous service to be eligible
- Gratuity is calculated on your basic salary only — housing, transport, and other allowances are excluded
- The maximum gratuity is capped at 2 years of basic salary, regardless of years worked
- Your employer must pay gratuity within 14 days of your last working day
- Gratuity is completely tax-free in the UAE — no deductions apply
The MOHRE Gratuity Formula — How It Works
The official UAE gratuity formula under Article 51 of the Labour Law uses a tiered system based on years of service:
| Years of Service | Gratuity Rate | Calculation |
|---|---|---|
| 1 to 5 years | 21 days per year | Daily wage × 21 × years |
| Above 5 years | 30 days per year | First 5 years at 21 days + remaining years at 30 days |
| Maximum cap | 2 years basic salary | No gratuity can exceed 24 months of basic salary |
Daily wage formula: Monthly basic salary ÷ 30 days = daily wage
Example for AED 10,000 basic salary, 3 years service:
- Daily wage = AED 10,000 ÷ 30 = AED 333.33
- Gratuity = AED 333.33 × 21 days × 3 years = AED 21,000
Real Gratuity Examples — AED Amounts at Different Salary Levels
Here is how much gratuity you receive at different service lengths and basic salary levels:
AED 8,000 Basic Salary
| Years of Service | Gratuity (AED) | Monthly Equivalent |
|---|---|---|
| 1 year | AED 5,600 | 0.7 months salary |
| 3 years | AED 16,800 | 2.1 months salary |
| 5 years | AED 28,000 | 3.5 months salary |
| 8 years | AED 49,600 | 6.2 months salary |
| 10 years | AED 76,000 | 9.5 months salary |
AED 10,000 Basic Salary
| Years of Service | Gratuity (AED) | Monthly Equivalent |
|---|---|---|
| 1 year | AED 7,000 | 0.7 months salary |
| 3 years | AED 21,000 | 2.1 months salary |
| 5 years | AED 35,000 | 3.5 months salary |
| 8 years | AED 62,000 | 6.2 months salary |
| 10 years | AED 95,000 | 9.5 months salary |
AED 15,000 Basic Salary
| Years of Service | Gratuity (AED) | Monthly Equivalent |
|---|---|---|
| 1 year | AED 10,500 | 0.7 months salary |
| 3 years | AED 31,500 | 2.1 months salary |
| 5 years | AED 52,500 | 3.5 months salary |
| 8 years | AED 93,000 | 6.2 months salary |
| 10 years | AED 142,500 | 9.5 months salary |
Use our free UAE End of Service Calculator to enter your exact basic salary and service dates for a precise figure. No login or registration required.
Resignation vs Termination — How It Affects Your Gratuity
Under the updated UAE Labour Law (Federal Decree-Law No. 33 of 2021, effective February 2022), all contracts are now classified as limited (fixed-term). The distinction between limited and unlimited contracts for gratuity reduction purposes has been largely standardised:
| Situation | Less than 1 year | 1–5 years | Above 5 years |
|---|---|---|---|
| Resignation | No gratuity | Full gratuity (21 days/year) | Full gratuity (21 days first 5 + 30 days after) |
| Termination (employer) | No gratuity | Full gratuity | Full gratuity |
| Gross misconduct (Article 120) | No gratuity | No gratuity | No gratuity |
| Mutual agreement | No gratuity | Full gratuity | Full gratuity |
| End of contract (not renewed) | No gratuity | Full gratuity | Full gratuity |
Important: If you are on an older unlimited contract that has not yet converted to a limited contract, partial gratuity reduction rules may still apply for resignation in years 1–5. Always check your specific contract terms or consult MOHRE.
Full and Final Settlement — What You’re Owed Beyond Gratuity
Your end-of-service payment is not just gratuity. The Full and Final Settlement (FFS) includes all outstanding amounts owed to you under Article 53 of the UAE Labour Law:
| Component | What It Includes | Calculated On |
|---|---|---|
| End of Service Gratuity | 21/30 day formula per year | Basic salary only |
| Unpaid Salary | Any salary not yet paid | Total salary package |
| Annual Leave Encashment | Unused leave days (30 days/year entitlement) | Daily wage × unused days |
| Notice Period Pay | If employer waives notice period | Total salary × notice days |
| Bonuses/Commissions | Any contractually agreed bonuses | Per contract terms |
| Deductions | Loans, advances taken from employer | Subtracted from total |
Example Full Final Settlement (AED 10,000 basic, 5 years service, 10 unused leave days):
- Gratuity: AED 35,000
- Annual leave encashment (10 days): AED 3,333
- Notice period (30 days, if waived): AED 10,000
- Total FFS (before deductions): AED 48,333
The 14-Day Payment Rule — Your Legal Right
Under Article 53 of the UAE Labour Law, your employer is legally required to pay your full and final settlement — including gratuity — within 14 days of your last working day.
If your employer fails to pay within 14 days, you can:
- File a complaint with MOHRE through the MOHRE app, website (mohre.gov.ae), or by calling 800 60
- Visit a Tasheel service centre in your emirate
- Escalate to the Labour Court if MOHRE mediation fails
Penalties for employers who fail to pay include heavy administrative fines, trade licence suspension, and restrictions on hiring new employees.
New: Alternative End of Service Benefits Scheme (2026)
Cabinet Resolution No. 96 of 2023 introduced a voluntary Alternative End-of-Service Benefits Scheme for private-sector employees. As of 2026, employers can choose to enrol their employees in this scheme as an alternative to the traditional lump-sum gratuity system.
| Feature | Traditional Gratuity | Alternative Scheme |
|---|---|---|
| How it works | Lump sum paid at end of service | Monthly employer contributions to investment fund |
| Employee receives | Fixed formula amount (21/30 day rule) | Contributions + investment returns |
| Investment risk | None — guaranteed | Market-linked — can grow or reduce |
| Participation | Default for all employees | Voluntary — employer opts in |
| Dubai free zones | DEWS scheme in DIFC | DIFC/ADGM have own separate rules |
If your employer has enrolled in the Alternative Scheme, your monthly contributions are managed by an approved investment fund. Upon leaving, you receive the accumulated contributions plus investment returns — which may be higher or lower than the traditional formula depending on market performance.
UAE End of Service Calculator — Calculate Your Exact Gratuity
Your exact gratuity depends on:
- Your basic salary (excluding housing, transport, other allowances)
- Your exact service dates (start and end date — partial years are pro-rated)
- Whether you resigned or were terminated
- Whether you are on a limited or unlimited contract
- Whether your employer participates in the Alternative Scheme
Use the free finzotools.com UAE End of Service Calculator — updated with MOHRE 2026 rules — to get your exact gratuity amount in AED. No login or registration required.
👉 Calculate Your UAE Gratuity Now →
Frequently Asked Questions
How is UAE gratuity calculated in 2026?
UAE gratuity is calculated using the MOHRE formula under Article 51 of the UAE Labour Law: 21 days of basic salary per year for the first 5 years of service, and 30 days of basic salary per year for service beyond 5 years. The daily wage is calculated as monthly basic salary ÷ 30. The total gratuity cannot exceed 2 years of basic salary.
Do I get gratuity if I resign in the UAE?
Yes — under the updated UAE Labour Law (Federal Decree-Law No. 33 of 2021), employees who resign after completing at least 1 year of continuous service are entitled to full gratuity. The previous rules that reduced gratuity for early resignation under unlimited contracts are being phased out as contracts standardise to limited (fixed-term) agreements.
How much gratuity do I get after 5 years in UAE?
After exactly 5 years of service, you receive 21 days of basic salary per year × 5 years = 105 days of basic salary. On a basic salary of AED 10,000 per month, this equals AED 10,000 ÷ 30 × 105 = AED 35,000. On AED 15,000 basic, that’s AED 52,500.
What is included in UAE Full and Final Settlement?
Your Full and Final Settlement (FFS) includes: end-of-service gratuity, any unpaid salary, encashment of unused annual leave (30 calendar days per year entitlement), notice period pay if waived by the employer, and any contractual bonuses or commissions. Loans or advances taken from your employer are deducted. Your employer must pay the full settlement within 14 days of your last working day under Article 53.
Is gratuity taxable in the UAE?
No. The UAE has no personal income tax, and gratuity payments are completely tax-free. You receive 100% of your calculated gratuity with no deductions for tax. This applies to all expatriate private-sector employees in the UAE.
What if my employer does not pay my gratuity on time?
If your employer fails to pay your gratuity within 14 days of your last working day, you can file a complaint with MOHRE through the MOHRE app, the website at mohre.gov.ae, or by calling the helpline at 800 60. MOHRE will attempt mediation first. If unresolved, the case proceeds to the Labour Court. Employers face significant penalties including heavy fines and trade licence suspension for delayed gratuity payment.
Related Calculators on Finzotools
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Last updated: June 2026. Gratuity figures are based on Federal Decree-Law No. 33 of 2021 (UAE Labour Law) and MOHRE guidelines. Sources: Ministry of Human Resources and Emiratisation (mohre.gov.ae), UAE Government Portal (u.ae), Cabinet Resolution No. 96 of 2023. Always verify your specific entitlement with your employer’s HR department or MOHRE before making financial decisions based on gratuity calculations.