UAE end-of-service gratuity, explained
Twenty-one days a year for the first five, thirty after, on basic salary only, capped at two years' pay. What that means in practice and where the common mistakes are.
Work out your end-of-service benefitThe accrual
A full-time private-sector worker who has completed at least one year of continuous service accrues twenty-one days' basic salary for each of the first five years, and thirty days for each year after that. Part years are pro-rated once the first year is complete.
The total cannot exceed two years' wage, which starts to bite at around twenty-six years of service.
Basic salary, not your package
This is where most of the disappointment comes from. The calculation uses basic salary alone - housing, transport, utilities and furniture allowances are all excluded. In the UAE it is common for basic to be half or less of the total package, which means the gratuity is half or less of what a reader assumed.
Check your contract for the basic figure before estimating anything.
Resigning
Under Federal Decree-Law 33 of 2021, resigning does not reduce the entitlement for a worker who has completed a year. The tiered reductions many people remember - a third between one and three years, two thirds between three and five - belonged to the earlier law that governed unlimited contracts, and that regime was replaced.
If your service straddles the change it is worth checking how your employer treats the earlier period.
What is paid alongside it
Gratuity is one of several things due at the end of employment, and it is easy to conflate them. Unpaid wages, accrued but untaken annual leave, and pay in lieu of notice where notice was not worked are all separate entitlements, and none of them is included in a gratuity figure.
Employers are required to settle all outstanding entitlements within fourteen days of the contract ending. If a final settlement looks low, it is worth checking which of these components it actually covers before assuming the gratuity calculation is wrong.
Free zones are different
The DIFC and ADGM operate their own employment regulations with their own end-of-service arrangements, and the DIFC in particular runs a funded scheme rather than a lump sum accrual. If you are employed by a free zone entity, the federal calculation is not the one that applies to you.