For a full-time expatriate worker in the UAE private sector, gratuity is worked out from the last basic salary: 21 days of basic pay for each of the first five years and 30 days for each year after that, with nothing due before one full year of continuous service and a ceiling of two years' wage. The examples below show that arithmetic step by step so you can check an employer's figure line by line.
Who this guide is for
This page is for private-sector employees and HR staff who want to see the calculation worked through with numbers. It assumes a full-time contract under Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (the UAE Labour Law).
If you first want to understand which inputs matter and why, read our companion guide on the inputs behind a gratuity calculation. If you only want a quick estimate, use the gratuity calculator.
This page does not cover UAE nationals (covered by pensions legislation), government employees, domestic workers, or the DIFC and ADGM financial free zones, which have their own employment laws. The DIFC, for example, generally uses its DEWS savings plan instead of this formula.
The rules the examples use
- Basic salary only. Article 51 of the Labour Law uses the last basic wage. Housing, transport and other allowances are left out.
- 21 days, then 30 days. 21 days of basic wage for each of the first five years, 30 days for each later year.
- One year minimum. Less than one year of continuous service means no gratuity under this formula.
- Part years count. After the first full year, part of a year is paid in proportion to the time worked.
- Unpaid absence is removed. Days of unpaid absence are not counted as service.
- The cap. The total cannot exceed two years' wage. Article 1 of the law defines "wage" as basic wage plus allowances, so the cap is not the same as two years' basic salary.
- Daily wage. The examples divide the monthly basic salary by 30. Article 67 of the Labour Law treats a month as 30 days and a year as 365 days. Neither the law nor Cabinet Resolution No. 1 of 2022 sets a separate "daily wage" formula for monthly-paid workers, so ask your employer which method it used.
Worked examples
All four examples are hypothetical. Each one keeps the daily wage unrounded until the last step, then rounds the result to two decimals.
Example 1 (hypothetical): three years at AED 6,000 basic. Daily basic wage: 6,000 ÷ 30 = AED 200. Gratuity days: 3 years × 21 = 63 days. Gratuity: 63 × 200 = AED 12,600.00.
Example 1b (hypothetical): the same worker, with 60 days of approved unpaid leave. Service is 1,095 days minus 60 unpaid days, which leaves 1,035 days. In years: 1,035 ÷ 365 = 2.835616 years. Gratuity days: 2.835616 × 21 = 59.547945 days. Gratuity: 59.547945 × 200 = AED 11,909.59. The unpaid leave reduced the result by about AED 690.
Example 2 (hypothetical): seven years and four months at AED 10,000 basic. Daily basic wage: 10,000 ÷ 30 = AED 333.33 (kept unrounded). First five years: 5 × 21 = 105 days. Remaining two years and four months: 2⅓ years × 30 = 70 days. Total: 175 days. Gratuity: 175 × 10,000 ÷ 30 = AED 58,333.33. If an employer counts the four months in days instead (120 ÷ 365 of a year), the figure is slightly lower, about AED 58,287.67. Ask which method was used.
Example 3 (hypothetical): eleven months at AED 8,000 basic. Continuous service is under one year, so no gratuity is due under this formula. Other dues, such as unpaid salary, pay for unused leave and any notice pay, may still be owed.
Example 4 (hypothetical): the cap, 28 years at AED 12,000 basic, with no allowances. Daily basic wage: 12,000 ÷ 30 = AED 400. Days: (5 × 21) + (23 × 30) = 105 + 690 = 795 days. Uncapped figure: 795 × 400 = AED 318,000.00. Article 51 caps gratuity at two years' "wage", and Article 1 of the law defines "wage" as the basic wage plus cash allowances and benefits in kind. This worker has no allowances, so two years' wage is 24 × 12,000 = AED 288,000.00, and the result is limited to AED 288,000.00. If you receive allowances, the cap is higher, so if the cap affects your case, confirm how it is being applied.
| Example | Service | Basic salary | Gratuity days | Result (AED) |
|---|---|---|---|---|
| 1 | 3 years | 6,000 | 63 | 12,600.00 |
| 1b | 1,035 days | 6,000 | 59.55 | 11,909.59 |
| 2 | 7 years 4 months | 10,000 | 175 | 58,333.33 |
| 3 | 11 months | 8,000 | 0 | 0.00 |
| 4 | 28 years | 12,000 | 795 (capped) | 288,000.00 |
Step by step
- Confirm the regime. Check that you are a full-time private-sector employee on the mainland or in a non-financial free zone, and not in the DIFC, ADGM, government or domestic work.
- Find your last basic salary. Use the figure in your latest MoHRE contract or payslip, not your total package.
- Fix the dates. Write down your first working day and your last working day.
- Subtract unpaid absence. Deduct approved unpaid leave and other unpaid absence days.
- Split the service. Separate the first five years from any service after five years.
- Multiply and add. Apply 21 days per year to the first part and 30 days per year to the rest, then multiply by the daily basic wage.
- Apply the cap. Compare the result with two years' wage (basic wage plus allowances).
- Check deductions. Cabinet Resolution No. 1 of 2022 (Article 29) lists the limited cases where an employer may deduct amounts, such as loans or court-ordered debts.
- Compare with the employer's sheet. Ask for the written working and compare each input.
- Act if unpaid. If dues are not paid within 14 days, use the MoHRE channels described in our unpaid salary checklist.
Documents checklist
- MoHRE employment contract and any renewals or offer letter
- Latest payslips showing the basic salary separately
- Salary-increase letters showing when the basic salary changed
- Leave records, especially approved unpaid leave
- Resignation or termination letter, and the last working day
- The employer's final-settlement sheet and its working
- Bank statements showing what was actually paid
- Any Savings Scheme enrolment notice or fund statements
Common mistakes
- Using total salary. Allowances are not part of the standard formula, so the estimate comes out too high.
- Rounding too early. Rounding the daily wage before multiplying can change the result by a few dirhams. Round at the end.
- Forgetting unpaid leave. Unpaid absence shortens the service period, as Example 1b shows.
- Applying the old resignation reductions. Article 51 of the current law does not reduce gratuity because the worker resigned. Older rules under Federal Law No. 8 of 1980 did. If your service began under an old unlimited contract, ask how Article 68's transitional rules apply to that earlier period.
- Ignoring the Savings Scheme. If your employer enrolled you in MoHRE's voluntary alternative end-of-service scheme, it pays monthly contributions into an approved fund instead of traditional gratuity for that period. Gratuity earned before enrolment is still due under the law.
- Assuming part-time pay works the same way. Article 30 of Cabinet Resolution No. 1 of 2022 scales gratuity for part-time and job-sharing work by contracted hours.
When to speak to a licensed lawyer
Most gratuity questions can be settled by comparing the inputs with the employer and, if needed, through MoHRE. Legal advice may help if the amount is large, if the cap applies, if your service began under an old unlimited contract, if the employer claims deductions for damage or violations, or if you worked in the DIFC or ADGM. If you choose, CaseDaleel can introduce you to an independent licensed professional. You can also start with a free case check.
Frequently asked questions
Is gratuity paid if I resign?
Under Article 51 of the current Labour Law, gratuity depends on completed continuous service, not on who ended the contract, but transitional rules may matter for service under old unlimited contracts.
Why divide by 30?
The examples divide monthly basic salary by 30 because Article 67 treats a month as 30 days; confirm the method your employer used.
Do allowances ever count?
Not in the standard formula, which uses basic salary; a contract or company policy that is more generous to the worker can still apply.
How is a part year paid?
After one full year of continuous service, part of a year is paid in proportion to the time worked.
What is the latest date for payment?
Article 53 requires wages and other dues to be paid within 14 days of the contract ending (as of September 2026, per the MoHRE-published law text).
Can my employer deduct money from gratuity?
Only amounts allowed by law or a judgment, such as loans or court-ordered debts, under the rules in Cabinet Resolution No. 1 of 2022.
Does the Savings Scheme replace gratuity?
For enrolled employees it replaces traditional gratuity for the enrolled period, and fund amounts are payable within 14 days after employment ends.
Official sources
- UAE Government portal — End of service benefits for workers in the private sector
- MoHRE — Federal Decree-Law No. 33 of 2021 and Cabinet Resolution No. 1 of 2022 (consolidated PDF)
- MoHRE — Dear Worker: Know Your Rights
- UAE Legislation — Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations (official Arabic text)
- UAE Legislation — Cabinet Resolution No. 1 of 2022 implementing the Labour Law (official Arabic text)
General information, not legal advice. CaseDaleel is not a law firm.