UAE Gratuity: The Complete 2026 Guide
Everything you need to know about UAE end-of-service gratuity under Federal Decree-Law 33/2021 — who qualifies, how it is worked out, and the traps that shrink your payout.
→ Open the UAE Gratuity Calculator
End-of-service gratuity is the lump sum your employer must pay when your job in the UAE ends. For most private-sector employees it is the single largest number on the final settlement, so it pays to understand exactly how it is built. This guide walks through the current rules under Federal Decree-Law No. 33 of 2021 (in force since February 2022) and the common misunderstandings that cost people money.
Who qualifies for UAE gratuity?
Any private-sector employee who completes at least one full year of continuous service is entitled to gratuity. Below one year, nothing is due. Time spent on probation counts toward that first year as long as employment continues. Unpaid absences and unauthorised days can be deducted from the service total.
The rules cover mainland UAE employees on the standard federal labour law. Two important carve-outs exist: DIFC and ADGM financial free zones run their own employment laws — DIFC replaced the lump-sum gratuity with the DEWS funded savings scheme. Most other free zones (JAFZA, DMCC, and so on) follow the federal formula.
The gratuity formula
Gratuity is calculated on your basic salary only — housing, transport and other allowances are excluded. The daily wage is your basic monthly salary divided by 30.
| Service period | Entitlement |
|---|---|
| Under 1 year | No gratuity |
| First 5 years | 21 days of basic salary per year |
| Beyond 5 years | 30 days of basic salary per year |
| Maximum | Two years' total wages, no matter how long you served |
So the first five years accrue at 21 days each, and every year after that accrues at the higher 30-day rate. Partial years are paid pro-rata. The whole award is then capped at two years' pay.
Does resignation reduce your gratuity?
No — and this is the biggest change most people miss. Under the old law, resigning before five years slashed your gratuity to a third or two-thirds. Since Decree-Law 33/2021, resignation no longer reduces gratuity at all. Anyone past one year of service receives the full 21/30-day calculation whether they resign or are terminated. If you have read an older article telling you to "stay five years or lose your gratuity," it is out of date.
The two-year cap
However long you work, total gratuity cannot exceed two years' worth of total wages. In practice this only bites for very long-serving employees — roughly beyond 20+ years at the 30-day rate — but it is worth knowing it exists.
When must gratuity be paid?
All end-of-service dues, including gratuity, must be paid within 14 days of the contract end date. Gratuity is normally one line inside a wider final settlement that also includes unused-leave encashment, any pending salary, and notice pay or deductions.
A quick example
An employee on a basic salary of AED 6,000 who completes 4 years: daily wage = 6,000 ÷ 30 = AED 200. Gratuity = 4 years × 21 days × 200 = AED 16,800. The same person at 7 years earns 21 days for the first five years plus 30 days for the last two: (5×21 + 2×30) × 200 = 210 days × 200 = AED 33,000. You can reproduce both figures instantly in our calculator.
How gratuity fits your full settlement
Gratuity is rarely paid on its own. It arrives inside a final settlement that also totals any unused annual-leave encashment, pending salary for days already worked, notice pay (or a deduction for unserved notice), and the reimbursement of any approved expenses. Because each component uses a slightly different wage basis — gratuity and leave encashment on basic salary, notice pay on your full salary — it is easy to mis-add them by hand. The employer must settle the whole package within 14 days of the contract end date, and you are entitled to an itemised breakdown showing each line.
One practical tip: check that your recorded basic salary on your labour contract matches what payroll actually uses. Some packages are structured with a low basic and high allowances, which quietly shrinks both your gratuity and your leave encashment. If you are negotiating a new contract, the basic-to-allowance split is worth as much attention as the headline number.
Key takeaways
- Gratuity needs at least 1 full year of continuous service; nothing is due below that.
- It is 21 days of basic pay per year for the first 5 years, then 30 days per year after.
- Only basic salary counts — allowances are excluded — and the daily wage is basic ÷ 30.
- Since Decree-Law 33/2021, resignation no longer reduces gratuity past one year of service.
- The whole award is capped at two years' total wages and must be paid within 14 days.
Frequently asked questions
Is UAE gratuity based on basic or gross salary?
Basic salary only. Housing, transport and other allowances are excluded from the gratuity calculation.
Do I lose my gratuity if I resign in the UAE?
No. Since Federal Decree-Law 33/2021, resignation no longer reduces gratuity. Anyone with more than one year of continuous service receives the full award whether they resign or are terminated.
What is the maximum gratuity in the UAE?
Two years' worth of total wages, regardless of how many years you have worked.
Do DIFC and ADGM employees get the same gratuity?
No. DIFC and ADGM run their own employment laws; DIFC replaced lump-sum gratuity with the DEWS funded savings scheme.
When must my gratuity be paid?
All end-of-service dues must be paid within 14 days of the contract end date.
Related calculators & guides
More UAE employment calculators
Calcnate keeps a full set of law-accurate UAE tools so you can check every part of an exit or contract in one place. Each is built on Federal Decree-Law 33/2021 and the same figures explained above:
- UAE Gratuity Calculator — your end-of-service lump sum on the 21/30-day bands.
- UAE Final Settlement Calculator — gratuity, leave, notice and pending pay combined.
- UAE Notice Period Calculator — notice length and pay in lieu.
- UAE Leave Encashment Calculator — cash value of unused annual leave.
- UAE Probation Period Calculator — the six-month rules and notice.
- UAE Maternity Leave Calculator — the 45+15 day pay split.
- UAE Unemployment Insurance (ILOE) Calculator — your involuntary-loss payout.
Browse everything on the UAE hub.