UAE End-of-Service Gratuity Calculator: How Is Gratuity Calculated?
UAE end-of-service gratuity is calculated on your basic salary: 21 days' pay for each of the first five years of service, then 30 days' pay for every year beyond, capped at two years' total pay. Employees need at least one year of continuous service, and MOHRE oversees the entitlement across the UAE.
What is end-of-service gratuity in the UAE?
End-of-service gratuity is a lump-sum benefit paid to an employee when their employment ends, provided they have completed at least one year of continuous service. In the UAE it is governed by Federal Decree-Law 33/2021 (the Labour Law) and administered by MOHRE (the Ministry of Human Resources and Emiratisation) for mainland private-sector staff.
The UAE's workforce is overwhelmingly expatriate, and most private-sector salaries flow through the Wage Protection System (WPS), so gratuity is one of the most searched pay questions among residents planning a job move or a final settlement. It is calculated only on basic salary — housing, transport and other allowances are excluded — which is why two colleagues on the same total package can receive very different amounts.
How is UAE gratuity calculated? The formula
The calculation has three moving parts: your daily wage, the number of accrued days, and an overall cap. The core rates below are set in the Labour Law and published by MOHRE.
Component | Rule |
|---|---|
Minimum service | 1 year of continuous service to qualify |
First 5 years | 21 days' basic pay per year of service |
Beyond 5 years | 30 days' basic pay per additional year |
Salary base | Basic salary only (allowances excluded) |
Maximum | Total gratuity cannot exceed 2 years' pay |
The step-by-step formula is:
- Daily wage = monthly basic salary ÷ 30
- First-five-years portion = daily wage × 21 × (years, up to 5)
- Post-five-years portion = daily wage × 30 × (years above 5)
- Gratuity = portion 2 + portion 3 (then apply the two-year cap)
Partial years are pro-rated on the same daily-wage basis, and any unpaid or unauthorised absence days are deducted before the calculation.
Worked example: gratuity for a six-year contract
Assume an employee on a monthly basic salary of AED 10,000 who completes exactly six years of continuous service. The figures below are illustrative, using the statutory rates only.
Step | Calculation | Amount |
|---|---|---|
Daily wage | AED 10,000 ÷ 30 | AED 333.33 |
First 5 years | AED 333.33 × 21 days × 5 | AED 35,000 |
Year 6 (beyond 5) | AED 333.33 × 30 days × 1 | AED 10,000 |
Total gratuity | AED 35,000 + AED 10,000 | AED 45,000 |
The AED 45,000 result is well below the two-year cap (AED 240,000 in this example), so no reduction applies. If the same employee earned allowances on top of basic pay, those allowances would not increase the gratuity.
Calculate your own entitlement
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How this calculator works (build spec)
- Inputs: monthly basic salary (AED), total years of continuous service (with months as a decimal or separate field for partial years), and jurisdiction toggle (mainland vs DIFC/ADGM savings scheme).
- Formula: daily wage = basic ÷ 30; gratuity = (daily wage × 21 × min(years, 5)) + (daily wage × 30 × max(years − 5, 0)); pro-rate partial years; then cap at 2 years' pay.
- Output: total gratuity in AED, with a breakdown of the first-five-years portion, the post-five-years portion, and a flag when the two-year cap is reached or when service is under one year (not eligible).
What counts as "basic salary" for gratuity?
Only the basic-salary line on your contract and salary certificate feeds the gratuity calculation. Housing, transport, mobile, schooling and other allowances are excluded, even though they appear on your WPS payslip and IBAN transfer. When you validate a package before signing, check the basic-to-total ratio: a package that is heavy on allowances and light on basic will produce a smaller end-of-service payout for the same headline number.
Do free zones and DIFC/ADGM follow the same rule?
Mainland private-sector employees fall under MOHRE and the federal Labour Law formula above. The DIFC and ADGM financial free zones run their own regimes — most notably the DIFC Employee Workplace Savings (DEWS) scheme, under which employers make monthly contributions to a funded plan instead of paying a single lump sum at the end. If you work in one of these zones, confirm which scheme applies before using a standard MOHRE-based calculator, as the accrual mechanics differ.
How AI helps
For lenders and HR-tech platforms in the UAE, the harder problem is not the gratuity arithmetic — it is reading the underlying evidence at scale: salary certificates, WPS records, offer letters and bank statements that state the all-important basic salary. YuVerse's Suite brings document AI and bank-statement analysis together so basic pay, allowances and salary-transfer history can be extracted and verified automatically, turning a manual read of every payslip into a structured, auditable field. The concrete outcome is faster, more consistent affordability and settlement checks without a person keying figures by hand.
This is a general explainer, not legal advice.
Frequently asked questions
How do I calculate gratuity in the UAE? Work out your daily wage (monthly basic salary ÷ 30), then award 21 days' pay for each of the first five years and 30 days' pay for each year after that. The total is capped at two years' pay.
Is gratuity based on basic salary or total salary in the UAE? Only basic salary. Allowances such as housing and transport are excluded, so your gratuity is usually smaller than a calculation on your full package would suggest.
Do I get gratuity if I resign in the UAE? Employees who complete at least one year of continuous service are entitled to gratuity on the basic-salary formula. Always confirm your specific entitlement with MOHRE or your employer, as unpaid absence days and jurisdiction can affect the final figure.
What is the minimum service to qualify for gratuity in the UAE? One year of continuous service. Below one year, no end-of-service gratuity is due, although other final-settlement dues such as unpaid leave may still apply.
Is there a maximum gratuity amount? Yes. Total end-of-service gratuity cannot exceed two years' pay, regardless of how long you have served.
Does gratuity apply in DIFC and ADGM? Those free zones run separate schemes, including the DIFC DEWS savings plan, so the mainland MOHRE formula may not apply directly. Check which scheme covers your contract.
Planning a move or a final settlement in the UAE? Explore more UAE pay and lending explainers on the YuVerse UAE hub.
References
- MOHRE (Ministry of Human Resources and Emiratisation) — End of service benefits and Labour Law: https://www.mohre.gov.ae/en/labour-law/end-of-service-benefits.aspx
- The UAE Government portal — Gratuity pay and end of service: https://u.ae/en/information-and-services/jobs/gratuity-pay
