UAE Gratuity Calculation 2026: The Complete Guide (with Examples)
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If you work in the UAE private sector, your end-of-service gratuity is a legal lump sum your employer owes you when your employment ends. This guide explains exactly how it is calculated in 2026 under Federal Decree-Law No. 33 of 2021, with worked examples.
The rule in one line
You earn 21 days of basic salary for each of your first 5 years, and 30 days of basic salary for every year after that — provided you have completed at least one year of continuous service. The total is capped at two years' wages.
Step by step
- Find your daily wage: basic monthly salary ÷ 30.
- First 5 years: daily wage × 21 × (years up to 5).
- Years beyond 5: daily wage × 30 × (years above 5).
- Add them up — that's your gratuity (capped at 2 years' salary).
Worked example
An employee on AED 6,000 basic with 7 years of service:
- Daily wage = 6,000 ÷ 30 = AED 200
- First 5 years = 200 × 21 × 5 = AED 21,000
- Next 2 years = 200 × 30 × 2 = AED 12,000
- Total gratuity = AED 33,000
Resignation vs termination
Under the old labour law, resigning early from an unlimited contract slashed your gratuity to one-third or two-thirds. That is gone. Since the 2021 law, resignation and termination give the same gratuity once you pass one year of service.
Basic vs gross salary
Gratuity is calculated on basic salary only. Housing, transport and other allowances do not count — which is why your gratuity is usually lower than people expect from their total package.
Free zones and exceptions
Most free zones (JAFZA, DMCC, DAFZA, etc.) follow the federal formula. The two exceptions are DIFC and ADGM, which run their own employment laws; DIFC replaced lump-sum gratuity with the DEWS workplace-savings scheme.
When it must be paid
Your employer must settle all end-of-service entitlements within 14 days of your last working day.
Frequently asked questions
Do I get full gratuity if I resign in the UAE?
Yes. Under Federal Decree-Law 33/2021 (in force since Feb 2022), resignation no longer reduces gratuity. Anyone with more than one year of continuous service receives the full calculation whether they resign or are terminated.
Is UAE gratuity on basic or gross salary?
Basic salary only. Housing, transport and other allowances are excluded.
Does this apply in free zones like JAFZA or DMCC?
Yes — most free zones follow the federal labour law. DIFC and ADGM are exceptions with their own regimes (DIFC uses the DEWS savings scheme).
What is the maximum UAE gratuity?
Total gratuity cannot exceed two years' worth of wages.
When must my gratuity be paid?
All end-of-service dues must be paid within 14 days of the contract end date.