Gratuity — the end-of-service payment — is often the largest single amount a UAE employee receives after their salary. Here is exactly how Article 51 of the UAE Labour Law works it out, with two worked examples and the 2022 rule change that many older guides still get wrong.
In short: UAE gratuity is 21 days of your last basic salary for each of the first five years of service and 30 days per year after that, capped at two years’ wage. You need at least one year of service, allowances do not count, and since February 2022 resigning does not reduce the amount.
End-of-service gratuity in the UAE mainland private sector is set by Article 51 of Federal Decree-Law No. 33 of 2021, the current Labour Law. It applies to full-time foreign (non-UAE-national) employees. UAE nationals are covered by the pension system instead, and free zones such as DIFC and ADGM run their own schemes (see the exceptions below).
The five rules that decide your amount:
In one line: Gratuity = (Basic ÷ 30 × 21 × first 5 years) + (Basic ÷ 30 × 30 × remaining years), capped at two years' wage. Days of unpaid absence are excluded from your service period, so keep your leave records.
Fatima's last basic salary is AED 8,000 a month and she completes exactly 4 years.
Her gratuity is AED 22,400. Note how the answer changes if you mistakenly used her full package (say AED 14,000 with allowances): the same formula would wrongly give AED 39,200. Always check which figure your payslip calls "basic".
Omar's last basic salary is AED 15,000 a month and he completes 9 years.
Notice the jump in the rate after year five — each extra year beyond the fifth is worth 30 days instead of 21, roughly 43% more per year. That is why long-serving employees see their gratuity accelerate.
This is the point most outdated websites — and many older calculators — still get wrong. Before 2 February 2022, the UAE had two contract types, "limited" and "unlimited", and if you resigned, your gratuity could be cut to one third (early years) or two thirds (later years) of the full amount.
Federal Decree-Law No. 33 of 2021 abolished that system. Since 2 February 2022, all private-sector contracts are fixed-term, and resigning does not reduce your gratuity at all. Omar in the example above receives the same AED 112,500 whether his employer ends the contract or he resigns after nine years.
So if a calculator asks whether your contract is "limited or unlimited", it is using a law that no longer exists — close the tab. One narrow exception remains: under Article 68(3), an employer may settle a genuinely pre-2022 unlimited contract under the old law. If you signed an unlimited contract before February 2022 and never moved to a new one, ask HR or MOHRE which basis applies to you.
When you leave, Article 53 requires your employer to pay all end-of-service entitlements within 14 days of the contract ending. If the amount looks wrong, compare it line by line with the formula above before signing any settlement statement.
No. Since 2 February 2022, resignation has no effect on gratuity. The old one-third and two-thirds reductions belonged to the abolished limited/unlimited contract system.
On your last basic salary only. Allowances such as housing and transport are excluded, and the daily rate is the monthly basic divided by 30.
Under Article 51, no — gratuity starts after one full year of continuous service. Some employers pay pro-rata amounts voluntarily, but it is not a statutory right in the first year.
Within 14 days of the contract ending (Article 53), together with any other end-of-service entitlements.