End-of-service gratuity is often the biggest single payment a worker receives in the Emirates. Yet many hotel, retail and construction staff leave without checking the number. This UAE gratuity calculation guide shows the formula in the UAE Labour Law, the rules that change the result, and three worked examples you can copy with your own salary.
It applies to private-sector employees on the mainland and in most free zones under Federal Decree-Law No. 33 of 2021. DIFC staff follow a different scheme, explained below.
Please note: this article is general information, not professional legal or insurance advice. Rules change, so check the official sources linked below or speak to a qualified professional before you decide. Read our disclaimer.
Table of contents
The UAE gratuity calculation formula
Under Article 51 of Federal Decree-Law No. 33 of 2021, a full-time foreign employee with at least one year of continuous service earns:
- 21 days of basic wage for each of the first five years
- 30 days of basic wage for each year after five
- Pro-rata gratuity for part of a year, once you have completed one year
- A cap: the total cannot exceed two years of wages
Gratuity uses your last basic wage, not allowances such as housing or transport. Days of unpaid absence do not count towards service. The Ministry of Human Resources and Emiratisation summarises these rights on its Know Your Rights page.
Daily wage: the step that changes the answer
The law sets the number of days; your employer converts the monthly basic wage to a daily wage. Two methods are common:
| Method | Daily wage for AED 10,000 basic | Used by |
|---|---|---|
| Basic ÷ 30 | AED 333.33 | The DMCC EOSB guide and the Dubai government calculators |
| (Basic × 12) ÷ 365 | AED 328.77 | Some employers and payroll systems |
The examples below use basic ÷ 30, as in the DMCC calculation guide. If your payslip shows a slightly lower figure, ask HR which method it used.
UAE gratuity calculation: 3 worked examples
Example 1: 2 years of service
Basic AED 4,000. Daily wage 4,000 ÷ 30 = AED 133.33. Gratuity = 21 × 2 × 133.33 = AED 5,600.
Example 2: 4 years and 3 months
Basic AED 10,000. Daily wage AED 333.33. Service 4.25 years × 21 days = 89.25 days. Gratuity = 89.25 × 333.33 = AED 29,750. (With the 365-day method: about AED 29,342.)
Example 3: more than 5 years (7 years)
Basic AED 10,000. First 5 years: 5 × 21 = 105 days. Next 2 years: 2 × 30 = 60 days. Total 165 days × 333.33 = AED 55,000. (With the 365-day method: about AED 54,247.) This is well below the two-year cap of AED 240,000.
Do your own UAE gratuity calculation the same way: find your basic, choose the daily method, count days, multiply.
What changed under the new UAE Labour Law
Before February 2022, workers on unlimited contracts who resigned early received reduced gratuity. Under the 2021 law all contracts are fixed-term, and the same formula applies whether you resign or are terminated, provided you have one year of service. Gratuity should be paid within 14 days of the end of employment, together with other dues.
The employer can deduct amounts you legally owe it, such as an unpaid loan, but cannot withhold gratuity as a penalty for resigning.
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UAE gratuity calculation for free zones and DIFC
Most free zones, including DMCC and JAFZA, follow the federal formula. Two exceptions matter:
- DIFC replaced end-of-service gratuity with the DEWS savings plan, where employers make monthly contributions to an investment fund. See the DIFC website.
- ADGM has its own employment regulations, with a similar 21 and 30 day structure and the option of an approved savings scheme.
Some mainland employers also offer optional savings schemes. If you are in one, your UAE gratuity calculation may be replaced by the scheme balance for the covered period.
Before you sign your final settlement
Your final settlement letter usually bundles several payments. Check each line before signing:
- Gratuity, using the UAE gratuity calculation above.
- Unpaid salary up to your last working day.
- Cash for unused annual leave, which is normally based on basic wage.
- Any repatriation ticket promised in your contract.
- Deductions, each with a reason you agree with.
Ask for the calculation sheet, keep a copy, and do not sign a "full and final" receipt until the money matches what you are owed.
If your gratuity is wrong or unpaid
- Ask HR in writing for the breakdown: basic wage, days, method.
- Compare it with your own calculation and contract.
- If it is still wrong, file a complaint with MOHRE through its app, website or call centre (free zones have their own authorities).
- Indian workers can also ask the Indian Embassy or Consulate's labour wing for guidance.
Many ECR workers also hold Pravasi Bharatiya Bima Yojana cover, which pays legal costs in employment disputes up to a limit. Before you leave the UAE for good, consider term insurance for NRI families, read power of attorney for NRI owners if you hold property in India, and if your parents plan a visit first, see visitor insurance for parents.
FAQ: UAE gratuity calculation
How is UAE gratuity calculated?
21 days of basic wage for each of the first five years and 30 days for each further year, pro-rated for part years, capped at two years of wages, after one year of service.
Do I get gratuity if I resign in the UAE?
Yes, under the 2021 law, if you complete at least one year of continuous service. Resignation no longer reduces the amount.
Is gratuity calculated on basic or gross salary?
On the last basic wage only. Housing, transport and other allowances are not included unless your contract says otherwise.
What is the UAE gratuity calculation for 2 years?
Basic ÷ 30 × 21 × 2. For a basic of AED 4,000 that is AED 5,600.
When must gratuity be paid?
Within 14 days of the end of the employment relationship, along with other final dues.
Read next
- Pravasi Bharatiya Bima Yojana (PBBY) explained
- Term insurance for NRI buyers: how to buy from abroad
- Visitor insurance for parents visiting the US, Canada, UK or Australia
- Power of attorney for NRI property and banking
- More UAE Labour Law guides
- About Expat Insurance & Law
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About the author: Sumit Manwal
Sumit Manwal is the founder of Hospitality Vacancy, the job site built for the hotel industry. He is passionate about helping hotel management students and hospitality professionals build successful careers, and connects talented people with hotel jobs across India, the Gulf and Europe. On Expat Insurance & Law he writes clear, practical insurance and legal-paperwork guides for NRIs and expat workers in the Gulf, US, UK, Canada and Australia, so every reader can make confident decisions about their work and life. He is not a legal or insurance professional, so every guide here links to official sources and he encourages readers to confirm details with a qualified expert before acting.
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