HR & Labour10 Aug 2026 · 6 min read · explainer

UAE End-of-Service Gratuity Rules

Calculate UAE end-of-service gratuity using the current basic-wage rules, service bands, part-year treatment, exclusions, and payment deadline.

UAE end-of-service gratuity for an eligible full-time foreign worker is calculated from the worker's last basic wage, not the total salary package. Under Article 51 of Federal Decree-Law No. 33 of 2021, the standard bands are 21 days of basic wage for each of the first five years of service and 30 days for each year after five.

Use the UAE gratuity calculator for an estimate, then check every input against the signed contract, payroll records, and the rules below.

Who qualifies under Article 51

The current consolidated Decree-Law published by MOHRE distinguishes between national and foreign workers:

A UAE national's end-of-service position follows the pensions and social-security legislation that applies to the worker.
A full-time foreign worker qualifies for the statutory gratuity after completing at least one year of continuous service.
A worker with less than one year of continuous service does not qualify for the standard Article 51 gratuity.
Once the worker has completed one year, a qualifying fraction of a later year is calculated proportionately.
Unpaid days of absence do not count in the service period used for the gratuity calculation.

The current Article 51 calculation does not reproduce the old 1980-law sliding reductions for a worker who resigned. Do not use a legacy table merely because the exit is a resignation. First identify the current legal regime, service, wage basis, and whether the worker is enrolled in an alternative scheme.

Basic wage is the key input

Article 1 defines basic wage separately from total wage. Basic wage is the amount stated as basic wage in the employment contract. Total wage can also include cash allowances, benefits in kind, and other agreed components. Article 51 uses the last basic wage for the standard calculation. Housing, transport, utilities, and similar allowances are not added to that base. The UAE Government's end-of-service guidance confirms this treatment.

This distinction is why a final-settlement worksheet should show both figures. Use the UAE salary calculator to sense-check the package split, but use the basic wage recorded in the operative contract for the legal calculation.

The full-time gratuity formula

For a worker paid monthly, a practical calculation is:

Daily basic wage = last monthly basic wage divided by 30.
First five years = daily basic wage multiplied by 21, then multiplied by qualifying service in that band.
Service after five years = daily basic wage multiplied by 30, then multiplied by qualifying service in that band.
Add the bands, including any qualifying pro-rated fraction of a year.
Check the Article 51 cap: the total gratuity must not exceed two years' wage.

Worked example

Assume a last monthly basic wage of AED 12,000 and seven complete years of eligible service, with no unpaid absence adjustment:

Daily basic wage: AED 12,000 / 30 = AED 400.
First five years: AED 400 x 21 x 5 = AED 42,000.
Next two years: AED 400 x 30 x 2 = AED 24,000.
Estimated gratuity: AED 66,000.

That is only the gratuity line. Salary through the last working day, notice allowance, unused statutory leave, expenses, commissions, or other contractual amounts belong in separate settlement lines. See the termination and final settlement guide.

Fractions, unpaid absence, and records

A worker who has already completed one continuous year receives a proportional benefit for a qualifying part-year. HR should calculate the actual continuous-service period and remove unpaid absence days before applying the band. Do not round service up to the next full year. Keep the joining date, last day, unpaid-leave ledger, and any earlier settlement or transfer record with the calculation.

Renewals and extensions do not reset service. Article 8 treats renewed periods as extensions for continuous-service purposes. That remains true now that all federal private-sector employment contracts are fixed-term. Read limited vs unlimited contracts after 2022.

Part-time and other work patterns

Article 52 sends non-full-time calculations to the Executive Regulation. Article 30 of Cabinet Resolution No. 1 of 2022 uses the contracted annual hours under the non-full-time model as a percentage of full-time annual hours, then applies that percentage to the full-time gratuity value. The rule does not apply gratuity to a temporary work model lasting less than one year.

Do not apply the full-time result unchanged to a part-time or job-sharing contract. Keep the annual-hour inputs and work pattern on the worksheet.

The voluntary alternative savings scheme

Cabinet Resolution No. 96 of 2023 created a voluntary alternative end-of-service benefits system. An employer may enrol selected workers through the approved process. For an enrolled worker, the traditional gratuity system is suspended from enrolment, while gratuity accrued before enrolment is preserved and calculated up to that date. MOHRE explains the transition in its alternative-scheme announcement.

Before calculating, payroll should ask one binary question: is this worker enrolled in the alternative scheme? If yes, separate the pre-enrolment gratuity from post-enrolment fund entitlements.

Deductions and the 14-day deadline

Article 51 permits deductions from gratuity only for amounts payable under law or a judgment, subject to Article 29 of the Executive Regulation. A general allegation, uninvestigated loss, or undocumented equipment issue is not a safe deduction method. Record the legal basis and supporting documents for every deduction.

Article 53 requires the employer to pay wages and all other end-of-contract entitlements within 14 days from the contract end date. The gratuity calculation should therefore be prepared before the last day, then finalised when attendance and leave inputs close. Notice treatment is covered in UAE notice periods and resignation.

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Important note

Shabang is a UAE business and marketing partner, not a law firm. This guide and calculator are general information, not legal advice or a binding settlement. Confirm unusual service histories, alternative-scheme cases, disputes, and jurisdiction questions with MOHRE, the relevant authority, or qualified UAE legal counsel.