How the gratuity is worked out
Under Article 51 of the UAE Labour Law (Federal Decree-Law No. 33 of 2021), a foreign employee with at least one year of continuous service receives:
- 21 days’ basic wage for each of the first five years;
- 30 days’ basic wage for each year after that;
- a proportional amount for part of a year, once the first year is complete.
It is worked out on the last basic wage, without allowances, and the total cannot exceed two years’ wage. Unpaid leave and unpaid absence do not count as service; probation and contract renewals do.
Two things the law leaves open
The daily wage. The law gives the days but not how to turn a monthly wage into a daily one. The calculator divides the monthly basic wage by 30, because the law counts a month as 30 days. It also shows the figure with the annual basic wage divided by 365, the method DIFC and ADGM state for their own rules. The two differ by about 1.4%.
The cap.The law caps the total at “two years’ wage” without saying whether that means the basic wage. The calculator applies it to the basic wage, where it only matters after about 25 and a half years of service.
Who it does not cover
- UAE nationals, whose end-of-service benefits follow the pension law, and GCC nationals under the GCC pension extension;
- employees of DIFC and ADGM companies, which have their own employment laws;
- domestic workers, who have a separate law;
- employees enrolled in the optional end-of-service savings scheme, whose gratuity stops when they join.
For employers
The gratuity is paid with the final wages within 14 days of the contract ending, and the employer may deduct only amounts due under the law or a court judgment, such as an unpaid loan. The amount owed grows with every year each person works, so it is worth knowing for the whole team, not only when someone leaves. See our accounting and bookkeeping page.