How UAE gratuity works
Gratuity is a lump sum paid when you leave a private sector job in the UAE after at least one year. It replaces a pension for most expats, and the formula is set by Federal Decree-Law No. 33 of 2021.
- Daily wage. Monthly basic salary divided by 30.
- First five years. 21 days of basic salary for each year.
- After five years. 30 days of basic salary for each further year.
- Part years. Paid in proportion once you pass one year.
- Cap. No more than two years' basic salary in total.
Worked example
Seven years of service on a basic salary of AED 12,000:
| Step | Amount |
|---|---|
| Daily wage (12,000 / 30) | AED 400 |
| First 5 years (5 x 21 x 400) | AED 42,000 |
| Next 2 years (2 x 30 x 400) | AED 24,000 |
| Total gratuity | AED 66,000 |
Things that can change the amount
Your contract can be more generous than the law but not less. Free zones such as DIFC run their own schemes, and government employees and UAE nationals usually fall under pension rules instead. If you were dismissed for serious misconduct, gratuity can be withheld. For anything unusual, check with your HR team or MOHRE.
Frequently asked questions
How is gratuity calculated in the UAE?
You get 21 days of basic salary for each of your first five years and 30 days for each year after that. A day's wage is your monthly basic salary divided by 30. Part years count in proportion once you have completed one year.
Do I get gratuity if I resign?
Under the current labour law, employees with at least one year of continuous service receive gratuity whether they resign or are let go. The old reductions for resigning early no longer apply to most private sector contracts.
Is gratuity based on basic or total salary?
Basic salary only. Housing, transport and other allowances are not included unless your contract says so.
Is there a maximum gratuity?
Yes. Total gratuity cannot exceed two years' wages, which is 24 months of basic salary.
Do unpaid leave days count?
No. Days of unpaid leave are taken out of your service period before gratuity is calculated.