# How to calculate gratuity in the UAE (with examples)

> UAE gratuity is 21 days' basic pay a year for the first five years and 30 days a year after that, capped at two years' pay. The formula, worked examples and the rules on resignation.

- URL: https://dubaibusinessinsight.com/living-working/how-to-calculate-gratuity-uae/
- Author: [Harper Cross](https://dubaibusinessinsight.com/authors/harper-cross/), Business Analyst & Researcher
- Published: 25 September 2026
- Updated: 26 September 2026
- Facts last checked: 26 September 2026
- Section: Living & Working
- Publisher: Dubai Business Insight (https://dubaibusinessinsight.com/)

## Key takeaways

- You qualify for gratuity after one year of continuous service with the same employer.
- The rate is 21 days' basic wage for each of the first 5 years, then 30 days for each year after that.
- Daily wage = last basic monthly salary ÷ 30. Allowances are not included.
- Total gratuity cannot exceed two years' basic wage, and part years are paid pro rata.
- Your employer must pay within 14 days of your contract ending (Article 53).

To calculate gratuity in the UAE, divide your last basic monthly salary by 30 to get your daily wage. Multiply that by 21 for each of your first five years of service, then by 30 for each year after that. Part years count pro rata, and the total cannot exceed two years' basic pay. You must have worked at least one year to qualify.

These rules come from Article 51 of Federal Decree-Law No. 33 of 2021, the [UAE Labour Law](https://dubaibusinessinsight.com/living-working/uae-labour-law/). They apply to private-sector employees on full-time contracts on the mainland and in most free zones.

Want the number now? Our [UAE gratuity calculator](https://dubaibusinessinsight.com/tools/gratuity-calculator/) does the maths and shows each step.

## The UAE gratuity formula

**Gratuity = (basic salary ÷ 30) × 21 × years 1–5 + (basic salary ÷ 30) × 30 × years after 5**

The key rules, in the law's words:

- **Eligibility:** full-time workers who complete "one or more years of continuous service".
- **Rate:** "a wage of (21) twenty one days for each year of the first five years of service" and "a wage of (30) thirty days for each year exceeding such period".
- **Salary used:** your **last basic wage**. The law defines basic wage as the contract wage "which does not include any other allowances or benefits in-kind".
- **Cap:** the total is limited to two years' wage.
- **Unpaid absence:** days of unpaid leave are not counted as service.

## Worked examples

All examples use basic salary ÷ 30 as the daily wage.

| Basic salary | Service | Calculation | Gratuity |
| --- | --- | --- | --- |
| AED 6,000 | 11 months | Under 1 year | AED 0 |
| AED 6,000 | 3 years | 200 × 21 × 3 | AED 12,600 |
| AED 6,000 | 3 years 6 months | 200 × 21 × 3.5 | AED 14,700 |
| AED 10,000 | 7 years | (333.33 × 21 × 5) + (333.33 × 30 × 2) | AED 55,000 |
| AED 10,000 | 26 years | 35,000 + (333.33 × 30 × 21) = 245,000 | AED 240,000 (capped at 2 years' pay) |

Check your own figures in the [gratuity calculator](https://dubaibusinessinsight.com/tools/gratuity-calculator/), including unpaid leave.

## What counts as "basic salary" for gratuity?

Only the basic wage written in your contract counts. Housing, transport, phone and other allowances are excluded, and so are bonuses and commission, unless your contract makes them part of the basic wage.

That is why the basic-versus-allowances split in your offer matters. Look it up in the approved contract through [MOHRE's enquiry services](https://dubaibusinessinsight.com/living-working/mohre-enquiry-services/) before you sign.

## Do you lose gratuity if you resign?

**Not under the current law.** Since the new Labour Law took effect on 2 February 2022, gratuity is worked out the same way whether you resign or your employer ends the contract, as long as you have completed one year of service. See our guides to [resignation and notice periods](https://dubaibusinessinsight.com/living-working/resignation-notice-period-uae/) and [termination benefits](https://dubaibusinessinsight.com/living-working/termination-benefits-uae/) for the other money you are owed.

The old law (Federal Law No. 8 of 1980) reduced gratuity for employees who resigned from unlimited contracts with less than five years' service. If part of your service falls before February 2022 and you resigned, ask MOHRE or a lawyer how those earlier years are treated in your case.

## Unlimited contracts and gratuity

All private-sector contracts had to move to fixed-term (limited) contracts under the 2021 law. Service under an old unlimited contract still counts towards your total years with the same employer. The 21-day and 30-day rates apply across your full continuous service.

## When must your employer pay gratuity?

Article 53 requires the employer to pay all of the worker's dues, including gratuity, **within 14 days** of the contract ending.

If payment is late or wrong:

1. Raise it with HR in writing and keep a copy.
2. File a complaint with MOHRE through its app, its website or the call centre on 80084.
3. MOHRE aims to settle within 14 days. It can decide claims up to AED 50,000 and sends larger or unresolved claims to the labour court.
4. Act quickly: claims are generally not heard more than one year after the right became due.

Your employer may lawfully deduct amounts you owe it, such as an unpaid loan, from your final settlement. It must be able to show what the deduction is for.

## Who these rules do not cover

| Group | Rule instead |
| --- | --- |
| DIFC employees | DIFC Employment Law. End-of-service is paid into the DEWS savings plan |
| ADGM employees | ADGM Employment Regulations |
| UAE and GCC nationals | Pension and social security laws |
| Federal and emirate government staff | Their own HR and pension laws |
| Employees in the voluntary savings scheme | The employer pays monthly contributions into an approved fund instead of a lump sum |
| Part-time workers | Gratuity is calculated in proportion to the hours actually worked |

## Gratuity and job loss

Gratuity is separate from unemployment insurance. If you lose your job involuntarily and have paid into ILOE for 12 months, you may also get 60% of your basic salary for up to three months. See our [ILOE insurance guide](https://dubaibusinessinsight.com/living-working/iloe-insurance-uae/).

## Frequently asked questions

### How is gratuity calculated in the UAE?

Divide your last basic monthly salary by 30. Multiply by 21 for each of your first five years and by 30 for each later year, and pay part years pro rata. The total is capped at two years' basic pay, and you need at least one year's service.

### How much gratuity will I get after 2 years in the UAE?

Two years at a basic salary of AED 6,000 gives 200 × 21 × 2 = AED 8,400. The formula is 21 days' basic pay per year for the first five years, using basic salary ÷ 30 as the daily wage.

### Is gratuity calculated on basic or gross salary?

On basic salary only. Allowances for housing, transport and other benefits are excluded unless your contract counts them as part of the basic wage.

### Can I get gratuity if I resign before one year?

No. The Labour Law requires at least one year of continuous service before any gratuity is due, whether you resign or are dismissed. After one year, part years count pro rata.

### How much gratuity for 5 years in the UAE?

Five years gives 105 days' basic pay (21 × 5). At a basic salary of AED 9,000, that is 300 × 105 = AED 31,500. From year six onwards, each year adds 30 days' pay.

### How long does an employer have to pay gratuity?

Within 14 days of the contract ending, under Article 53 of the Labour Law. If it is not paid, you can file a complaint with MOHRE on 80084 or through the MOHRE app.

## Sources

- [Federal Decree-Law No. 33 of 2021 (UAE Labour Law), official text on u.ae — Articles 1, 51 and 53](https://assets.u.ae/api/public/content/eb65a60bbff949fa912eddd566613014?v=7174ed78)
- [UAE Government portal: Resolving labour disputes](https://u.ae/en/information-and-services/jobs/employment-in-the-private-sector/labour-dispute)
- [Ministry of Human Resources and Emiratisation](https://www.mohre.gov.ae/)

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Cite as: "How to calculate gratuity in the UAE (with examples)", Dubai Business Insight, updated 26 September 2026. https://dubaibusinessinsight.com/living-working/how-to-calculate-gratuity-uae/