Leaving your job in the UAE and you are asking yourself how much gratuity you will get? Or perhaps you simply need to play the future finances wisely before switching employees? Whichever, you are in the right place.
My name is Fatima Saleh, and the founder of UAE Calculator Hub. I have created this blog to help you know and compute your UAE gratuity in the simplest manner possible.
I am going to take you through it all in this guide, including the most recent changes in the UAE Labour Law, to the actual formulae of gratuity applicable to limited and unlimited contracts.
What Is Gratuity in the UAE?
In the UAE, gratuity is a financial reward that is distributed to employees who have finished a minimum of one year of unbroken service. It belongs to your end-of-service settlement, as it is provided under the UAE Federal Decree-Law No. 33 of 2021. You can use our gratuity calculator to get an estimate of your gratuity.
How Is Gratuity Calculated in the UAE?
The Core Formula
Gratuity=Basic Salary/30 x number of Gratuity days x Years of service.
The computation of gratuity is as follows:
- Basic salary = most recently attracted basic pay (without allowances).
- Gratuity days = 21 days during the first 5 years, 30 days thereafter.
- Years of service = total amount of service.
as per UAE Labour Law
As stated in the UAE Labour Law, gratuity is based on:
- Type of contract (limited/unlimited)
- Duration of service
- Reason why leaving (resignation or termination)?
for a Limited Contract
You are under a limited contract but are working over a specific period (e.g. 2 or 3 years). You can receive gratuity on the following terms, should you finish your term of contract:
- Between 1 and 5 years: 21 days’ salary of basic pay per year.
- 5 years and above: 30 days basic pay per year.
Example (Limited Contract)
Assuming your basic salary = AED 10,000 and 6 years working = your gratuity is:
- First 5 years → 21 days × 5 = 105 days
- 6th year → 30 days × 1 = 30 days
Total = 135 days’ salary
( 10,000÷30)×135=AED 45,000
for an Unlimited Contract
You are at liberty to resign at any given time under an unlimited contract with notice. The gratuity varies as either resignation or termination.
If You Resign
- 1–3 years: 1/3 of 21 days per year
- 3–5 years: 2/3 of 21 days per year
- 5+ years: full 21 days per year
If You’re Terminated
- You receive complete gratuity (21 days a year with 1 to 5 years, 30 days a year after 5 years).
Example (Unlimited Contract Resignation)
Suppose that your salary is basic = AED 8,000 and you worked 4 years:
(8,000÷30)×21×4=22,400
Resigned before 5 years → 2/3 × 22,400 = AED 14,933
for 2 Years
Assuming you worked 2 years on a limited contract, 2-year payoffs.
(21÷30)×10,000×2=AED14,000
In the case of an unlimited contract (resignation in the next 2 years):
(1/3×21÷30×10,000×2)=AED4,667
According to the type of contract, therefore, your gratuity at the end of 2 years can be a big difference.
for 5 Years
In case your basic salary was AED 12,000 and your term was limited; 5 years.
(12,000÷30)×21×5=AED42,000
How to Calculate End-of-Service Gratuity
End-of-service gratuity merely means what you will receive upon leaving your employment.
It is only calculated on basic salary and not on the entire package. Housing, transport, or other allowances are exclusionary.
In case you have unpaid leaves, they can be subtracted from your overall service period.
in Dubai
The same UAE Labour Law regulates the rules of gratuity in Dubai. The formula of calculation is the same whether you are working in Dubai, Abu Dhabi, or Sharjah.
Nevertheless, in free zones (such as JAFZA or DIFC), local governments can have a few other policies; always review your employment agreement or zone government.
in Abu Dhabi and Sharjah
In Abu Dhabi and Sharjah, there is gratuity by federal UAE labour legislation; thus, it follows the same calculation. You just need your:
- Last basic salary
- Years of service
- Contract type
Next, follow the formula – or just give it a quick look at my UAE Gratuity Calculator.
for Private Sector Employees
The UAE Labour Law grants gratuity to all employees of the private sector. The employees of the government can adhere to various pension schemes.
Therefore, when you are in a privately owned company in Dubai, Sharjah or Abu Dhabi, this rule of gratuity models you are in.
in the UAE Online
To calculate the amount of gratuity, the simplest method is to enter my Free Online Calculator of Gratuity on the UAE Calculator Hub.
Here’s how:
- Enter your last basic salary
- Select an unlimited or a limited contract.
- Add your start and end date
- Click “Calculate”
You are going to have your precise gratuity in seconds, according to the 2026 labour legislation in the UAE.
in Excel
In case you want to do it manually in Excel, it can be done using the following simple formula:
= (Basic_Salary/30)*Gratuity_Days*Years_of_Service
Example:
Assuming that your salary has been 8,000 AED and that you have worked 4 years, then:
=(8000/30)*21*4 = 22,400
You can adjust this formula for limited or This formula can be modified for limited or unlimited contracts. contracts accordingly.
in UAE Free Zones (JAFZA, SAIF Zone, DIFC)
The majority of free zones are based on the UAE Federal Law, and not all of them should be governed by the employment regulations (such as DIFC or ADGM).
With JAFZA or the SAIF Zone, the cost of gratuity is generally similar to the private sector.
However, always confirm with your zone authority or HR department.
Example (Simple Breakdown)
Let’s take a real example:
- Basic salary: AED 9,000
- Years of service: 3
- Contract: Limited
(9,000÷30)×21×3=AED18,900
for Terminated Employees
Should you be fired (not due to misconduct), you also receive full gratuity according to law. But in case you are dismissed on grounds of gross misconduct, your gratuity can be foregone.
for 1 Year in the UAE
Upon the termination of 1 full year of service, you will receive 21 days’ salary in the form of gratuity.
If your basic salary is AED 10,000:
(10,000÷30)×21=AED7,000
in Qatar, Oman, and Saudi Arabia
Although all the GCC countries possess similar systems, the formulas vary slightly.
- Qatar: Gratuity = basic salary x 3 weeks x years of service.
- Saudi Arabia: 1/2 months’ salary in the first 5 years, 1 month every year after that.
- Oman: First 3 years, 15 days pay, 30 days thereafter.
This way, the calculation system of the UAE is one of the simplest in the area.
When Will You Receive Your Gratuity Payment?
Under the UAE Labour Law, employers have to pay gratuity within 14 days upon the termination of the contract or upon the termination of employment.
How to Calculate Your Gratuity Instantly
The easiest method of locating your gratuity is via my UAE Gratuity Calculator. It gives you:
- Instant results
- Precise figures as stated by the UAE law.
- Choice to either compute limited or unlimited contracts.
You only need to input your salary and the length of service, and in a couple of seconds, you will know how much you will earn at the end of service.
Frequently Asked Questions
1. Is HRA Included in the Gratuity Calculation?
No, there is no housing allowance (HRA) or other benefits. Only basic salary is used.
2. Are Leave Days Deducted When Calculating Gratuity?
Admittedly, unpaid leaves are not counted as service period.
3. Can Sick Leave Affect Gratuity?
No, paid sick leave does not have any impact on gratuity, but unpaid leave can.
4. What if My Company Closes Down?
In case of the shutdown of your employer, you still get the full gratuity depending on the years of service.
5. Can Part-Time Employees Get Gratuity?
Yes, pro-rata basis, the part-time employees are entitled to gratuity for the actual working hours.
Conclusion
Computation of gratuity in the UAE is not merely a formula but an entitlement of an employee. Under the UAE law, knowing how to compute the gratuity of 2, 5, or 10 years, you will be able to get what is rightfully yours.
