How to calculate gratuity in the UAE
Last reviewed: 14 June 2026Checked against the official rules.How we verify
End-of-service gratuity in the UAE is set by Federal Decree-Law No. 33 of 2021. The formula is simple once you know the three numbers it depends on: your basic salary, your length of service, and the daily-wage rate the law uses. Here is exactly how it works, with a worked example.
In short
Your UAE gratuity is 21 days of basic pay for each of your first five years, plus 30 days for each year after that, on your last basic salary, capped at two years' pay and not reduced if you resign.
Key facts
- Rate
- 21 days/year for years 1-5, then 30 days/year
- Eligibility
- 1 year of continuous service
- Wage basis
- Basic salary only (allowances excluded)
- Maximum
- Two years' basic wage
- On resignation
- Paid in full (since 2 Feb 2022)
- Tax
- None (no UAE income tax)
01Step 1 — Find your daily basic wage
Gratuity is calculated on basic salary only, not your total package. Housing, transport and other allowances are excluded by law. Take your last monthly basic salary, multiply by 12, and divide by 365 to get your daily basic wage. For a basic salary of AED 10,000, that is 10,000 × 12 ÷ 365 = AED 328.77 per day.
02Step 2 — Apply the 21-day and 30-day rates
Under Article 51, you earn 21 days of basic wage for each of your first five years of service, and 30 days for each year beyond five. Multiply your daily wage by 21 (or 30) for each year, and pro-rate any partial year by the days actually served.
03Step 3 — Check the two-year cap
Article 51(5) caps total gratuity at two years' basic wage. This only affects very long service: at a basic salary of AED 10,000, the cap is AED 240,000, which you would reach after roughly 34 years.
04Worked example — 7 years at AED 10,000 basic
Daily wage = AED 328.77. First five years: 5 × 21 × 328.77 = AED 34,520.55. Remaining two years: 2 × 30 × 328.77 = AED 19,726.03. Total gratuity = AED 54,246.58. The two-year cap (AED 240,000) does not apply, so this is the full amount.
05Does resigning reduce it?
No. Since the law took effect on 2 February 2022, you receive the full gratuity whether you resign or your employer ends the contract. The old reductions of one-third or two-thirds for resignation were abolished with the 1980 law. Any online calculator that still deducts a third on resignation is out of date.
06What about free zones?
Most free zones (DMCC, JAFZA, and others) follow these same federal rules. The exceptions are the financial free zones: DIFC replaced gratuity with the funded DEWS savings scheme, and ADGM runs its own gratuity rules. If you work in DIFC or ADGM, the 21/30-day formula does not apply to you.
| Years of service | Gratuity |
|---|---|
| 1 year | AED 6,904 |
| 3 years | AED 20,712 |
| 5 years | AED 34,521 |
| 7 years | AED 54,247 |
| 10 years | AED 83,836 |
Skip the maths. Enter your salary and dates and get your exact figure, with the breakdown.
Frequently asked questions
Is gratuity calculated on basic or total salary?
Basic salary only. Allowances such as housing and transport are excluded by law.
Do I need one full year to qualify?
Yes. You must complete at least one year of continuous service. Unpaid leave days are excluded from the service period.
Is gratuity taxed in the UAE?
No. The UAE does not levy personal income tax, so end-of-service gratuity is paid in full without deduction.
Guides for other countries
Based on Federal Decree-Law No. 33 of 2021 (MOHRE)