End of service gratuity in the UAE private sector is calculated on basic salary alone: 21 days’ basic pay for each of the first five years of service, and 30 days’ basic pay for each year after that, with the total capped at two years’ wage. You need at least one year of continuous service to qualify, and under the current law resigning no longer cuts the figure down.
The governing instrument onshore is Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations, together with its executive regulations and later amendments, including Federal Decree-Law No. 9 of 2024. It replaced Federal Law No. 8 of 1980, and several of the rules people still repeat from the old law are simply no longer correct. Any gratuity calculator you use online is only as good as the assumptions behind it, so it helps to know what the law actually says.
Who qualifies for end of service gratuity in the UAE?
A full-time employee in the onshore private sector qualifies after one year of continuous service. Below one year, there is no gratuity entitlement. Days of unpaid leave are not counted towards the period of service, so a long unpaid sabbatical will push the accrual date back.
Gratuity is a benefit for expatriate workers. UAE nationals, and GCC nationals working in the UAE, are generally covered by pension and social security contributions through the General Pension and Social Security Authority or their home GCC scheme rather than by gratuity. Employers who treat an Emirati hire as a gratuity case have usually misunderstood their registration obligations.
Domestic workers sit under a separate federal law on domestic workers rather than the main employment law, with its own end of service provision.
How do the 21 day and 30 day rules work?
The formula is straightforward once you separate the two tiers:
- For each of the first five years of service, 21 days of basic wage per year.
- For each year beyond five, 30 days of basic wage per year.
- Part years after the first full year are paid pro rata, so nine months into year three earns three quarters of that year’s entitlement.
- The total gratuity may not exceed two years’ wage.
The daily rate is basic monthly salary divided by 30. An employee with ten years of service therefore earns five years at 21 days plus five years at 30 days, which is 255 days of basic pay, and the two-year cap only bites at much longer service or where salary structures are unusual.
The executive regulations set a pro rata method for part-time and other flexible working models, based on the proportion of contracted hours to full-time hours. If you are on a part-time or job-share arrangement, check the current regulations rather than assuming the full-time figure.
What counts as basic salary for a gratuity calculation?
Basic salary means the basic wage stated in the employment contract, not total package. Housing, transport, mobile, schooling and similar allowances are excluded, as are commission, bonus and overtime. This is where most disputes start.
Two patterns cause trouble. The first is a contract that sets basic salary at a small fraction of the total package, which is legal but leaves the employee with a much smaller gratuity than they expected. The second is a mismatch between the salary registered with the Ministry of Human Resources and Emiratisation and the salary the employee is actually paid. Where the two differ, expect an argument, and expect the registered contract to carry real weight.
Check the basic figure on your Ministry-registered contract before you resign, not after.
Does resigning reduce your gratuity under the current law?
No. Under the old 1980 law, an employee who resigned before completing five years lost a third or two thirds of the gratuity depending on length of service. That sliding scale is gone. A full-time employee who resigns after one year receives the same accrual as one who is dismissed.
The current law also removed the old forfeiture rule. Under Federal Law No. 8 of 1980 an employee summarily dismissed under the misconduct grounds lost gratuity entirely. Under Federal Decree-Law No. 33 of 2021, an employee dismissed without notice under the summary dismissal grounds still keeps the end of service entitlement. Employers who withhold gratuity after a misconduct dismissal are usually applying the wrong law.
Separately, the employer may deduct sums the employee genuinely owes, such as a documented loan or an advance, from the final payment. That is a deduction, not a forfeiture, and it needs to be evidenced.
One more legacy point: unlimited contracts no longer exist onshore. All private sector employment contracts under the current law are fixed term, and employers were required to move legacy unlimited contracts across during a transition period. Gratuity does not depend on the contract type any more, which removes a whole category of old disputes.
The maximum permitted length of a fixed-term contract has itself been amended since 2021, so if the term matters to you, check the current text of the law rather than a 2022 summary.
How do free zones, DIFC and ADGM differ?
Most free zones, including the large commercial ones, apply the federal employment law, so the 21 and 30 day calculation applies in the ordinary way. The free zone authority handles permits, not the substance of the entitlement.
The two financial free zones are different. The DIFC operates its own employment law, under which traditional gratuity has been replaced by the DIFC Employee Workplace Savings scheme. Employers make monthly contributions to a regulated fund at a percentage of basic salary that steps up with length of service, and the employee holds an account rather than waiting for a lump sum. ADGM applies its own employment regulations with its own end of service rules, which have been amended in recent years, so check the current ADGM regulations rather than assuming they mirror either the DIFC or the onshore position.
Onshore, there is now a voluntary alternative. Cabinet Resolution No. 96 of 2023 created a savings scheme supervised by the Ministry, under which a participating employer contributes monthly to an approved fund instead of accruing gratuity. Participation is the employer’s choice, not the employee’s. Gratuity accrued before the employer joins is preserved and calculated on basic salary as at the date of enrolment. The Ministry issued further guidance on fund selection, registration and withdrawals in late 2025, and practice here is still settling.
What are the common disputes, and how long do you have to claim?
The recurring fights are over basic salary versus package, whether service was continuous across group companies, whether unpaid leave should be stripped out, whether a period of absence broke service, and whether deductions were properly evidenced. Claims about accrued untaken annual leave usually travel alongside the gratuity claim.
Under Article 54 as amended by Federal Decree-Law No. 9 of 2024, the limitation period for bringing an employment claim is two years from the end of the employment relationship, extended from the previous one year. The route starts with a complaint to the Ministry, which can issue a binding decision on claims up to a value threshold set in the law, with an appeal to the Court of First Instance within a short window. Larger claims are referred to the courts. Court and ministry charges are set by the relevant authority and should be checked against the current schedule.
Where do people get caught out?
Three things. Accepting a verbal figure at exit without seeing the calculation in writing. Signing a full and final settlement before checking whether basic salary, service dates and leave balance are right, because a signed settlement is hard to unwind. And assuming the old rules still apply, particularly the resignation reduction, which employers and employees both still quote years after it was repealed.
If your employer has joined the alternative savings scheme, your final payment will look nothing like a gratuity calculation, and you should ask for the fund statement and the preserved gratuity figure separately.
This is general information about UAE employment law as at September 2026, not legal advice. The position varies by emirate and free zone and changes often. Take advice on your own facts.
Frequently asked questions
Do I get gratuity if I resign in the UAE?
Yes. A full-time employee who resigns after at least one year of continuous service receives the full accrual. The sliding reduction that applied to resignations under the 1980 law was repealed by Federal Decree-Law No. 33 of 2021. What still matters is your basic salary figure and your continuous service dates, not whether you left voluntarily.
Is gratuity calculated on basic salary or total salary?
Basic salary only, as stated in the employment contract registered with the Ministry. Housing, transport, schooling and other allowances are excluded, as are bonus, commission and overtime. Two employees on the same package can end up with very different gratuity figures purely because of how their basic salary was set in the contract.
How long do I have to claim unpaid gratuity?
Two years from the end of the employment relationship, following the amendment made by Federal Decree-Law No. 9 of 2024. The previous period was one year. The claim starts as a complaint to the Ministry of Human Resources and Emiratisation, which can decide smaller claims itself and refers larger ones onward.
Does the DIFC pay gratuity the same way?
No. The DIFC replaced traditional gratuity with the DIFC Employee Workplace Savings scheme, under which the employer makes monthly contributions to a regulated fund rather than paying a lump sum at exit. ADGM has separate rules again. Most other free zones apply the federal calculation, so check which regime your employer sits in.
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