UAE End-of-Service Gratuity: How to Calculate What You're Owed (2026)
A complete guide to the official MOHRE gratuity formula — the 21-day and 30-day rules, real AED worked examples, what counts as basic salary, partial year calculations, domestic worker rates, and your options if your employer doesn't pay.
Key Rule: Basic Salary Only
Gratuity is calculated on basic salary only. Housing allowance, transport allowance, bonuses, and all other benefits are excluded. Always check your MOHRE-registered contract for the exact basic salary figure.
In This Guide
- What Is End-of-Service Gratuity?
- Who Is Eligible?
- The Official MOHRE Gratuity Formula
- Step-by-Step Worked Examples (in AED)
- What Counts as Basic Salary?
- What Changed Under the New Labour Law (2022)
- Partial Year Service — Pro-Rata Calculation
- Domestic Workers — Different Formula
- What to Do If Your Employer Doesn't Pay
- Can Employers Deduct from Gratuity?
- The New Voluntary Savings Scheme
- Frequently Asked Questions
What Is End-of-Service Gratuity?
End-of-service gratuity (also known as EOSB — End-of-Service Benefit) is a mandatory lump-sum payment that every UAE private sector employer must pay to eligible employees when their employment ends. It is a legal right enshrined in Article 51 of Federal Decree-Law No. 33 of 2021 — the current UAE Labour Law.
Whether you resign, are terminated, or complete a fixed-term contract, gratuity is owed to you — as long as you have completed at least one continuous year of service.
Who Is Eligible for End-of-Service Gratuity?
You are entitled to end-of-service gratuity if you meet all of the following conditions:
UAE nationals do not receive gratuity under this system — they are enrolled in government pension and social security schemes instead.
The Official MOHRE Gratuity Formula
The formula is the same for all private sector employees, whether they resigned or were terminated:
Daily Wage × 21 × Number of Years
Applies to first five years of continuous service
Daily Wage × 30 × Additional Years
Applies to each year beyond the first five
Monthly Basic Salary ÷ 30
Always divide by 30, regardless of month length
Maximum cap: Total gratuity cannot exceed 2 years' basic salary, regardless of total years worked.
Step-by-Step Worked Examples (in AED)
These are the most-searched calculations for UAE end-of-service gratuity. Use your own basic salary and years of service to follow the same method.
Example 1: 3 Years of Service
Basic Salary: AED 6,000 / month | Daily Wage: AED 200
| Period | Calculation | Amount |
|---|---|---|
| First 3 years | 200 × 21 × 3 | AED 12,600 |
| Total Gratuity | AED 12,600 | |
Example 2: 8 Years of Service
Basic Salary: AED 10,000 / month | Daily Wage: AED 333.33
| Period | Calculation | Amount |
|---|---|---|
| First 5 years | 333.33 × 21 × 5 | AED 35,000 |
| Next 3 years | 333.33 × 30 × 3 | AED 30,000 |
| Total Gratuity | AED 65,000 | |
Example 3: 20 Years of Service — Cap Check
Basic Salary: AED 8,000 / month | Calculated gratuity (formula): AED 148,000
Maximum cap: 2 years × AED 8,000 × 12 = AED 192,000
→ Employee receives AED 148,000 (cap not triggered). The cap most commonly applies to very long-tenured employees with high salaries — always verify your total does not exceed 24 months of basic salary.
What Counts as Basic Salary?
This is the most common mistake employees make when estimating their gratuity. Only the fixed basic salary on your MOHRE-registered contract is used in the calculation.
| ✓ Included | ✗ Excluded |
|---|---|
Fixed basic salary | Housing allowance Transport allowance Meal allowance Commission Bonuses Overtime pay |
What Changed Under the New Labour Law (2022)?
Since February 2, 2022, Federal Decree-Law No. 33 of 2021 replaced the old 1980 UAE Labour Law. Four key changes directly affect gratuity:
All contracts are now fixed-term
Since February 2, 2022, unlimited contracts are no longer issued. All new employment contracts under MOHRE are limited-term.
No more gratuity reduction for resignations
Under the old 1980 Labour Law, employees who resigned before 5 years received a reduced percentage. Under the new law, the full formula applies whether you resign or are terminated.
Gratuity owed from year one completion
Complete one full year of service and you are entitled to gratuity — no exceptions based on reason for leaving (unless Article 44 gross misconduct applies).
14-day payment deadline
Employers must settle all gratuity within 14 days of your last working day, or face MOHRE penalties including fines and work permit suspension.
Partial Year Service — Pro-Rata Calculation
If you have completed more than one year but your last year is incomplete, you are entitled to pro-rata gratuity for the partial year:
After the 15th of the month
That month counts as a full month in the calculation
Before the 15th of the month
That partial month is excluded from the calculation
Worked Example: 2 Years and 7 Months at AED 5,000 Basic Salary
Domestic Workers — Different Formula
Domestic workers — including housemaids, drivers, cooks, and nannies — are covered under a separate law: Federal Decree-Law No. 9 of 2022. Their gratuity formula is different from the standard MOHRE rate:
1 month's basic salary × each completed year of service
Domestic worker gratuity must be paid within 10 days of the end of employment — a shorter window than the 14-day deadline for regular employees. Employers who sponsor housemaids or household staff must plan accordingly.
What to Do If Your Employer Doesn't Pay
If your employer fails to pay gratuity within 14 days of your final working day, follow these steps:
Employer penalties for non-payment include:
Can Employers Deduct from Gratuity?
Yes, but only in specific legally permitted circumstances:
Deductions cannot exceed the equivalent of 5 days' wages per month during employment. Arbitrary deductions are illegal and constitute grounds for a MOHRE complaint.
Gratuity and the New Voluntary Savings Scheme
In 2023, MOHRE introduced a Voluntary Alternative End-of-Service Benefits Scheme (Cabinet Resolution No. 96 of 2023), allowing employers to enrol employees into an investment-based savings fund in place of the traditional gratuity system.
If you are unsure which scheme applies to you, check with your HR department or review your MOHRE contract details. If your employer has not opted in, you remain covered by the standard gratuity formula.
Frequently Asked Questions — UAE End-of-Service Gratuity
Does gratuity apply during probation?
No. Probation periods (up to 6 months) are excluded from the service calculation. Gratuity eligibility and calculation begin only after the probation period ends.
What if I was terminated without notice?
You are still entitled to full gratuity if the termination was not due to gross misconduct under Article 44. You may also be entitled to compensation for arbitrary dismissal — up to 3 months' total salary.
Can my employer refuse to pay if I left before my contract ended?
Not if you completed at least one year and gave proper notice. Leaving before the notice period may allow the employer to deduct up to 30 days' salary — but not to withhold gratuity entirely.
Is gratuity taxed in the UAE?
No. There is no personal income tax in the UAE, so your full gratuity amount is paid without any tax deduction.
What if my basic salary changed during my service?
Gratuity is calculated on your last drawn basic salary at the time of leaving, applied to all years of service.
Do free zone employees get gratuity?
Most free zones follow UAE Labour Law. DIFC and ADGM operate under their own frameworks (the DEWS pension-style system). Check with your employer or HR if you are based in a free zone.
What is the maximum gratuity an employee can receive?
Total gratuity cannot exceed the equivalent of 2 years' basic salary, regardless of how many years were served. For example, an employee on AED 10,000 basic salary cannot receive more than AED 240,000 in gratuity.
Does the new Voluntary Savings Scheme replace standard gratuity?
Only if your employer has enrolled you in the scheme. As of 2026, employer participation is still voluntary. If your employer has not enrolled you, the standard MOHRE gratuity formula applies in full.
Key Numbers to Remember
- 21 days — daily wage multiplier for first 5 years of service
- 30 days — daily wage multiplier for each year beyond year 5
- ÷ 30 — always divide monthly salary by 30 to get daily wage
- 2 years' salary — maximum cap on total gratuity
- 14 days — employer must pay gratuity within 14 days of last working day
- 10 days — payment deadline for domestic worker gratuity
- 1 month/year — domestic worker gratuity rate
- Basic salary only — allowances and bonuses are excluded from the calculation
This guide is for informational purposes only, based on UAE Labour Law (Federal Decree-Law No. 33 of 2021) and MOHRE guidelines as of May 2026. For complex disputes or legal advice, consult a qualified UAE employment lawyer or contact MOHRE directly at 800 60. Oasis Typing is a private administrative centre and is not affiliated with any UAE government authority.
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