UAE Gratuity: The Complete Guide for 2026

1. What Is UAE Gratuity?

UAE gratuity — formally called the End-of-Service Benefit (EOSB) — is a lump-sum payment that eligible private-sector employees receive when their employment in the UAE ends. It is a statutory right enshrined in UAE Labour Law, not a discretionary bonus or a company benefit.

Gratuity serves as a form of financial protection for workers leaving employment after years of service. The longer you work and the higher your basic salary, the greater your gratuity entitlement — up to the statutory maximum.

In 2026, UAE gratuity continues to be governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, which came into force on 2 February 2022 and replaced the previous Federal Law No. 8 of 1980.

2. Legal Basis

The primary legal authority for UAE private-sector gratuity is:

• Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations — specifically Article 51 (End-of-Service Gratuity)
• Implementing Cabinet and Ministerial resolutions that provide additional detail on specific matters

The official source for UAE Labour Law is the Ministry of Human Resources and Emiratisation (MOHRE) at mohre.gov.aeand the UAE Government portal at u.ae.

This guide is an independent informational resource and does not constitute legal advice. Always verify your specific entitlement with MOHRE or a qualified UAE employment lawyer.

3. Who Is Eligible for UAE Gratuity?

Under the general UAE private-sector framework, you are eligible for end-of-service gratuity if:

• You have completed at least one full year (365 days) of continuous eligible service with the same employer
• You are a private-sector employee subject to UAE Labour Law (Federal Decree-Law No. 33 of 2021)
• Your employment is ending — through resignation, termination, contract expiry, or any other lawful reason

Who May Not Be Covered

Several categories of workers are not covered by the standard gratuity framework:

• Domestic workers — governed by a separate legal framework (Cabinet Resolution No. 10 of 2017)
• DIFC employees — governed by the DIFC Employment Law
• ADGM employees — governed by ADGM Employment Regulations
• UAE nationals — generally covered by pension schemes (GPSSA) rather than standard gratuity
• Government sector employees — subject to separate public-sector schemes
• Workers enrolled in the End-of-Service Savings Scheme — their EOSB is handled through the investment fund

4. The Calculation Formula

The standard UAE private-sector gratuity formula under Article 51 of Federal Decree-Law No. 33 of 2021 is:

This formula applies to eligible service days only. Approved unpaid absence periods are excluded from the count.

5. Understanding Daily Wage

The daily wage is the foundation of the entire calculation. In the UAE, it is calculated by dividing your monthly basic salary by 30 — not 26, not 22, not any other number. This is the convention established by UAE Labour Law.

If you see a UAE gratuity calculation that divides by 26, it has incorrectly applied the Indian Payment of Gratuity Act formula. The UAE divisor is always 30. See our UAE vs India comparisonfor more detail.

6. The 5-Year Threshold

The 5-year mark is the most important milestone in UAE gratuity accumulation. The rate you earn per year increases significantly once you cross 5 complete years of eligible service:

• Years 1–5: 21 days' basic wage per year
• Year 6 onwards: 30 days' basic wage per year

This means the rate increases by more than 40% once you pass the 5-year mark. For someone earning AED 10,000/month:

• Year 5 gratuity contribution: AED 333.33 × 21 = AED 7,000
• Year 6 gratuity contribution: AED 333.33 × 30 = AED 10,000

This jump makes completing 5 years a significant financial milestone for UAE workers.

7. Partial Years of Service

Very few employees will leave on an exact anniversary of their start date. Partial years — the remaining months and days after your last complete year — are counted proportionally.

The formula for partial year gratuity is:

One important point: if you have served 4 years and 7 months, you are eligible for gratuity. The partial 7-month period adds to the 4-year base. The idea that you need exactly 5 years to get any gratuity is a myth — you need 1 year.

8. The Maximum Gratuity Cap

UAE Labour Law caps total gratuity at the equivalent of two years' basic wage. This is calculated as:

For most employees, the 2-year cap is not reached even after 20+ years of service, because the formula produces a total that stays below the cap. However, at very high salaries or very long service periods, the cap can become relevant. Our calculator automatically checks and applies the cap.

9. Gratuity on Resignation

One of the most common questions UAE workers ask is: "Do I get gratuity if I resign?"

Under the current UAE Labour Law (Federal Decree-Law No. 33 of 2021), the general answer is: yes, provided you have completed at least one year of eligible service.

This represents a significant change from the previous law (Federal Law No. 8 of 1980), which reduced gratuity for unlimited-contract employees who resigned:

• 1–3 years' service on resignation: only 1/3 of calculated gratuity
• 3–5 years' service on resignation: only 2/3 of calculated gratuity
• 5+ years' service on resignation: full calculated gratuity

These reduced rates no longer apply as a universal rule under the current general framework. If you resigned after completing the minimum service period, you should be entitled to your full calculated gratuity.

Important caveats: workers in free zones with their own employment law, domestic workers, and those enrolled in the End-of-Service Savings Scheme may have different rules. Always verify your specific situation.

10. Gratuity on Termination

If your employer terminates your employment — for any lawful reason other than certain specified acts of gross misconduct — you are generally entitled to your full calculated gratuity once the minimum service threshold is met.

Termination for gross misconduct (as specifically defined in the law, primarily Article 44) is one of the few scenarios where gratuity may be affected. However, this is a specific and limited provision — not every performance issue or disciplinary matter qualifies. If you believe your gratuity was wrongly denied on grounds of misconduct, you can challenge this with MOHRE.

11. Basic Salary vs Gross Salary

This is arguably the most common source of confusion in UAE gratuity calculations.Gratuity is calculated on basic salary only — not your gross monthly package.

For most UAE workers, the monthly transfer to their bank account includes multiple components:

• Basic salary ← This is what you enter in the calculator
• Housing allowance ← Excluded from gratuity calculation
• Transport allowance ← Excluded
• Meal/food allowance ← Excluded
• Phone allowance ← Excluded
• Other allowances ← Generally excluded

Your basic salary is stated in your employment contract. Look for the line specifically labelled "basic salary" or "basic wage." Your payslip should also show the breakdown.

If you use your full monthly transfer instead of your basic salary, you will significantly overestimate your gratuity. For someone with AED 6,000 basic + AED 4,000 allowances (AED 10,000 total), using the gross figure produces an estimate 67% higher than the correct calculation.

12. Impact of Unpaid Leave

Periods of approved unpaid leave are excluded from the eligible service period used for gratuity calculation. This means they reduce your effective qualifying service.

For example, if you have worked for 400 total calendar days but took 60 days of approved unpaid leave, your eligible service is 340 days — which is below the 365-day minimum threshold. In this case, you would not qualify for the standard gratuity despite having been employed for over a year.

Our calculator includes an optional field to enter unpaid absence days so the calculation reflects your actual eligible service.

Paid leave (annual leave, sick leave, etc.) does not reduce your eligible service — only unpaid absence does.

13. Final Settlement vs Gratuity

It is important not to confuse gratuity with your full final settlement. Gratuity is one component of what you are owed when employment ends.

A complete final settlement may include:

• End-of-service gratuity (what this calculator estimates)
• Unpaid salary for days worked in the final pay period
• Accrued annual leave encashment for untaken leave days
• Notice period pay if applicable
• Repatriation benefits if contractually provided
• Less lawful deductions (outstanding advances, loans per contract)

Your final settlement can be substantially more than just the gratuity amount. Make sure you account for all components when assessing what you are owed.

14. Special Categories and Schemes

End-of-Service Savings Scheme

The UAE introduced a voluntary End-of-Service Savings Scheme as an alternative to traditional gratuity. Under this scheme, employers contribute to regulated investment funds on behalf of enrolled employees. If you are enrolled, your EOSB is paid from the fund at the end of employment — not directly by your employer as a traditional gratuity payment.

If you are unsure whether you are enrolled, check with your HR department. Enrolled employees should not use the standard gratuity calculator to estimate their entitlement.

Domestic Workers

Domestic workers (housemaids, drivers, nannies, cooks, etc. employed in private households) are governed by Cabinet Resolution No. 10 of 2017, not Federal Decree-Law No. 33 of 2021. They have separate entitlements and the standard calculator should not be used for domestic worker cases. Contact MOHRE directly for domestic worker-specific guidance.

Free Zone Workers

Workers in free zones with their own employment law framework (DIFC, ADGM, and some others) may have different gratuity rules. Always check which law governs your employment contract. If your employer is registered in the DIFC, the DIFC Employment Law applies, not the federal UAE Labour Law.

15. Worked Examples

Example A: 2 Years, AED 8,000 Basic Salary

Example B: 5 Years, AED 12,000 Basic Salary

Example C: 7 Years 7 Months, AED 10,000 Basic Salary

Example D: 4 Years 7 Months, AED 9,000 Basic Salary

16. How to Verify Your Gratuity

Our calculator provides an estimate based on the general framework. To verify your specific entitlement:

• Use MOHRE's official platform:mohre.gov.aeprovides official smart services including gratuity calculation tools.
• Request a settlement statement: Ask your HR department for a written final settlement breakdown showing all components.
• Contact MOHRE helpline: Call 800 60 for official guidance.
• Consult a UAE employment lawyer: For disputed amounts or complex situations (transitional contracts, free-zone arrangements, etc.), professional legal advice is worth the investment.

Key Takeaways for 2026

• ✅ Minimum 1 year service for eligibility (not 5 years)
• ✅ 21 days/year for first 5 years; 30 days/year beyond 5 years
• ✅ Calculated on basic salary only — not gross pay
• ✅ Resignation generally entitles you to full gratuity (under current law)
• ✅ Maximum cap: 2 years' basic wage (salary × 24)
• ✅ Divisor is 30 (not 26 — that is the India rule)
• ✅ Unpaid leave reduces eligible service
• ✅ Partial years are calculated proportionally
• ✅ Gratuity is one part of final settlement — check all components
• ✅ Verify with MOHRE for your specific situation