How to Compute Gratuity in the UAE: The Complete 2026 Guide
End-of-service gratuity is one of the largest single payments most private-sector employees in the UAE will ever receive from an employer and one of the most commonly miscalculated. This guide shows how the calculation works under the current law, with worked examples for employees checking their own payout and HR teams preparing a final settlement.
The Formula at a Glance
Under the UAE Labour Law, gratuity is calculated on your last basic salary as follows:
- 21 days’ basic salary for each of the first 5 years of service, plus
- 30 days’ basic salary for each year beyond 5 years.
Gratuity = monthly basic salary ÷ 30 × eligible gratuity days
You qualify after completing one full year of continuous service. Everything below explains the parts that decide whether your number is right.
Estimate Your End-of-Service Gratuity
Enter your basic salary and service dates. The calculator estimates gratuity using the standard UAE mainland private-sector full-time formula.
Your Details
Use basic salary only. Exclude housing, transport and other allowances.
Optional. If left blank, the calculator shows the formula estimate and notes that the statutory cap check may require wage details.
Unpaid absence is excluded from the service term.
Estimated Result
Estimated Gratuity
AED 0
Enter details to calculate.
This is an estimate for UAE mainland private-sector full-time employees. DIFC, ADGM, domestic workers and alternative schemes may follow different rules.
Who Is Eligible
Gratuity is paid to full-time expatriate private-sector employees who complete at least one year of continuous service.
- Less than one year of service no gratuity.
- Probation period time on probation counts toward total service once the employee continues in employment, but employment that ends before one full year earns no gratuity.
- UAE nationals receive benefits under pension and social security legislation instead of the expatriate gratuity formula.
- Free-zone employees in DIFC and ADGM may fall under separate schemes or rules.
- Unpaid leave and unauthorised absence do not count as service, so those days are subtracted before the formula is applied.
Basic Salary Only
This is where most calculation errors and disputes come from. Gratuity is computed on your basic salary the fixed figure stated in your employment contract and not on the full salary package.
Housing allowance, transport allowance, utilities, mobile allowance, bonuses, commissions, overtime and benefits in kind are excluded from the accrual base unless they are contractually part of basic salary.
So if your total package is AED 12,000 made up of AED 7,000 basic plus AED 5,000 in allowances, gratuity is calculated on AED 7,000, not AED 12,000.
Worked Examples
The examples below use the standard formula and assume no unpaid leave.
| Service Length | Formula | Result |
|---|---|---|
| 1 year at AED 10,000 basic | 10,000 ÷ 30 × 21 × 1 | AED 7,000 |
| 2 years at AED 10,000 basic | 10,000 ÷ 30 × 21 × 2 | AED 14,000 |
| 5 years at AED 10,000 basic | 10,000 ÷ 30 × 21 × 5 | AED 35,000 |
| 6 years at AED 10,000 basic | First 5 years + 1 year at 30 days | AED 45,000 |
| 10 years at AED 10,000 basic | First 5 years + 5 years at 30 days | AED 85,000 |
| 6.5 years at AED 12,000 basic | 12,000 ÷ 30 × [(21 × 5) + (30 × 1.5)] | AED 60,000 |
The Two-Year Cap
The statutory gratuity cannot exceed two years’ wage. This cap usually matters only after long service or where the calculation produces a very high amount.
Because the law uses basic wage for the accrual calculation and wage terminology for the cap, it is better to check the employment contract and salary structure before applying the cap in a final settlement.
Resignation vs Termination
Under the current UAE Labour Law framework, the old reduction logic linked to resignation under unlimited contracts should not be used as the main calculation method for the standard private-sector formula.
The calculation should focus on the current rule: last basic wage, completed service period, unpaid absence excluded, 21 days for the first five years and 30 days for each year after that.
What If You Are Dismissed for Misconduct?
Misconduct cases should be treated carefully. Dismissal without notice and end-of-service benefits are not the same issue.
Where misconduct is involved, the gratuity position can depend on the facts, the contract, lawful deductions and the applicable legal process. Employees and employers should avoid relying on old Article 120-style assumptions without checking the current law position.
Partial Years, Part-Time Work and Special Cases
Partial years are paid pro-rata after the employee completes one full year of continuous service. Six and a half years is not rounded down to six; the additional half-year is included proportionally.
Part-time, reduced-hours and job-sharing arrangements may require a proportional calculation based on working hours or the relevant implementing rules.
DIFC, ADGM, domestic workers and employers using approved alternative end-of-service schemes may follow different rules or processes. Those cases should be checked separately.
When Must Gratuity Be Paid?
The final settlement may include gratuity, unused annual leave, unpaid wages and lawful deductions.
Under the UAE Labour Law framework, wages and other entitlements should be paid within 14 days from the end date of the employment contract.
Frequently Asked Questions
How is gratuity calculated in the UAE?
Gratuity is calculated on the last basic wage: 21 days’ basic wage for each of the first five years of service and 30 days’ basic wage for each year after that, provided the employee has completed at least one year of continuous service.
Is gratuity calculated on basic salary or total salary?
The standard gratuity accrual is calculated on basic salary, not the total salary package. Allowances and benefits are normally excluded from the accrual base.
Do I get gratuity if I resign?
After completing one year of continuous service, the current standard formula should be applied based on service length and last basic wage. Old unlimited-contract resignation reductions should not be used as the main current-law calculation path.
How much gratuity after 5 years in the UAE?
Five years gives 105 days of basic salary, calculated as 5 × 21 days. For example, on AED 10,000 monthly basic salary, the gratuity estimate is AED 35,000.
Is there a maximum gratuity amount?
Yes. The law states that the total end-of-service benefit must not exceed two years’ wage.
When should gratuity be paid after leaving?
Wages and other entitlements should be paid within 14 days from the end date of the employment contract.
Important Notes & Limitations
This calculator reflects the standard UAE mainland private-sector full-time gratuity formula: last basic wage, service term counted properly, unpaid absence excluded, 21-day accrual for the first five years and 30-day accrual thereafter.
It is an estimate only. Jurisdiction-specific cases, DIFC, ADGM, domestic workers, part-time arrangements, alternative savings schemes, disputes, deductions and misconduct-related cases should be reviewed separately.
