UAE End of Service Benefits: Rules Explained

Who the standard rules cover

Gratuity rewards length of service, so it grows with every year you stay, and it is paid on top of any unused annual leave and any other end of service settlement. The standard rules cover full-time employees in the private sector, on the mainland and in most free zones.

They do not cover everyone in the UAE. Employees in the Dubai International Financial Centre (DIFC) are under the DEWS savings scheme instead. Abu Dhabi Global Market (ADGM) has its own end of service model. Domestic workers follow a separate domestic workers law, and government employees are under civil service rules. If any of those apply to you, the standard formula will not give the right figure. For most private-sector employees in Dubai, the same Article 51 rules apply, and the same rules apply in Abu Dhabi for mainland private-sector employees.

The formula in plain steps

First, find the daily basic wage by dividing the monthly basic wage by 30. Then multiply: 21 days of basic wage for each of the first five years, and 30 days of basic wage for each year after the fifth. A partial year is paid in proportion to the days worked in it, at the rate for that year. Finally, check the cap: total gratuity cannot exceed two years' wage, which is 24 monthly wages.

The calculation uses the last basic wage you were entitled to, not the wage you started on and not an average over your service. A late raise therefore raises the whole gratuity. The minimum service is one full year of continuous service. Below one year no gratuity is due. Once you pass one year, any further partial year is paid in proportion. Days of unpaid absence do not count, while paid annual leave, paid sick leave and paid maternity leave still count.

Basic wage or total salary

This is the most common and most expensive mistake. Gratuity is calculated on the basic wage only: the fixed salary figure in your contract, excluding housing allowance, transport allowance, telephone and food allowances, bonuses, commissions, overtime and any other variable pay.

If your total package is 18,000 dirhams but your basic wage is 12,000 dirhams, your gratuity is calculated on 12,000 dirhams, not on 18,000 dirhams. The only place total salary matters is the cap, which is measured on total monthly wage. Check the basic wage against your MOHRE-registered contract and your last payslip. If they disagree, the contract figure decides a dispute. Verify the basic wage and the service dates first, because both are where disputes usually start.

Worked examples

Take seven years at a basic wage of 10,000 dirhams a month. The daily wage is 10,000 divided by 30, which is 333.33 dirhams. The first five years give five times 21, which is 105 days, worth 35,000 dirhams. Years six and seven give two times 30, which is 60 days, worth 20,000 dirhams. The total is 55,000 dirhams.

Take two years at 6,000 dirhams a month. The daily wage is 200 dirhams. Two years give two times 21, which is 42 days, worth 8,400 dirhams. Even if the total package is 12,000 dirhams, the gratuity is still 8,400 dirhams, because allowances never enter the calculation. Now take the cap. Without a cap, 40 years at 10,000 dirhams a month would give 1,155 days times 333.33 dirhams, which is 385,000 dirhams. The cap is 24 times 10,000, which is 240,000 dirhams, so the gratuity is 240,000 dirhams.

Resignation, dismissal and deadlines

Under the old law, resigning early could reduce gratuity. That no longer applies. Since 2 February 2022, resignation no longer reduces the entitlement: resigning and being terminated give the same gratuity, provided the one-year minimum is met. Two exceptions matter. Dismissal for gross misconduct under Article 44 can mean losing the gratuity altogether, for cases such as assuming a false identity, causing substantial material loss, revealing trade secrets, or being intoxicated at work. Part-time and flexible workers are covered by Article 52, which gives gratuity in proportion to their working hours compared with a full-time worker.

Once the contract ends, the employer must pay all end of service entitlements, including gratuity, within 14 days, under Article 53. If payment does not arrive, or the figure looks wrong, the route is a complaint through MOHRE, using the MOHRE app or website. Keep your contract, your last payslips and any settlement document, because MOHRE decides on the basic wage and service dates in the registered contract. A contract that promises more than the law also stands, because the law sets a floor, not a ceiling. If your employer joined the voluntary savings scheme available since late 2023, your benefit is measured from the scheme statement, not from Article 51.

Compare any settlement line by line with the UAE gratuity tool. See all guides for the country on the United Arab Emirates page, and browse more guides on the Calcotia blog.