How to Calculate Gratuity in UAE

A complete step-by-step guide to calculating your UAE end-of-service gratuity. Based on Federal Decree-Law No. 33 of 2021, Article 51.

Want the quick answer? Use our UAE Gratuity Calculatorfor an instant result. This guide explains the full calculation method step by step.

Step 1: Determine Eligibility

Before calculating, confirm you meet the minimum eligibility requirement:at least one full year (365 days) of continuous eligible service.

  • If you have worked less than 1 complete year, you are generally not entitled to gratuity under the standard framework.
  • Approved unpaid absence periods are excluded from eligible service.
  • Special employment categories (domestic workers, certain free-zone workers) have separate rules.

Step 2: Identify Your Last Basic Wage

Gratuity is calculated on your last basic monthly salary — not your total salary or gross package.

  • Included: Basic salary component
  • Excluded: Housing allowance, transport allowance, meal allowance, commissions (generally), and other standard allowances

See Basic Salary for Gratuity for a detailed explanation.

Step 3: Calculate Your Daily Wage

Under UAE Labour Law, the daily wage for gratuity is calculated by dividing the monthly basic salary by 30 (not 26 or any other number — that is an Indian rule).

Daily Wage Formula
Daily wage = Monthly basic salary ÷ 30 Example: AED 10,000 ÷ 30 = AED 333.33 per day

Step 4: Determine Your Eligible Service Period

Calculate the total calendar days from your first working date to your last working date. Then subtract any approved unpaid absence days.

Service Period Calculation
Total days = Last working date − First working date Eligible days = Total days − Unpaid absence days Example: Start: 1 Jan 2018, End: 31 Dec 2025 Total days ≈ 2,921 days (8 years) Eligible days = 2,921 (if no unpaid absence)

Step 5: Apply the First-Period Rate (Years 1–5)

For each complete year in the first 5 years, you earn 21 days' wage.

First 5 Years (21 days/year)
First period gratuity = Daily wage × 21 × years (max 5) Example (AED 333.33/day, 5 years): = 333.33 × 21 × 5 = AED 35,000

Step 6: Apply the Second-Period Rate (Beyond 5 Years)

For each complete year beyond the first 5 years, you earn 30 days' wage.

Beyond 5 Years (30 days/year)
Second period = Daily wage × 30 × (total years − 5) Example (AED 333.33/day, 8 years): = 333.33 × 30 × 3 = AED 30,000

Step 7: Add Partial Year Gratuity

Any partial year beyond your complete years is calculated proportionally. The fraction is: remaining days ÷ 365.

Partial Year Calculation
Partial gratuity = Daily wage × rate × (remaining days ÷ 365) Example: 7 months (approx 213 days) beyond 5 years = 333.33 × 30 × (213 ÷ 365) = 333.33 × 30 × 0.5836 = AED 5,836

Step 8: Apply the Maximum Cap

Total gratuity cannot exceed the equivalent of 2 years' basic wage.

Maximum Cap
Max cap = Monthly basic salary × 12 × 2 = Monthly basic salary × 24 Example: AED 10,000 × 24 = AED 240,000 If calculated gratuity > AED 240,000 → cap applies If calculated gratuity ≤ AED 240,000 → full amount payable

Step 9: Review Exceptions

Important exceptions to the standard calculation:

  • Domestic workers follow a separate legal framework
  • Free-zone workers may have different rules
  • Workers enrolled in the End-of-Service Savings Scheme are treated differently
  • Lawful deductions by the employer may reduce the net amount
  • Termination for gross misconduct (as defined by law) may affect entitlement

Complete Worked Example

7 Years 7 Months — AED 10,000 Basic Salary
Basic salary = AED 10,000/month Daily wage = 10,000 ÷ 30 = AED 333.33/day Service = 7 years 7 months (approx 7 yrs + 213 days) First 5 years: 333.33 × 21 × 5 = AED 35,000.00 Next 2 years: 333.33 × 30 × 2 = AED 20,000.00 7 months (213d):333.33 × 30 × (213÷365) = AED 5,835.62 Raw total = AED 60,835.62 Cap (24 mo) = AED 240,000 (not reached) Final gratuity≈ AED 60,835.62
≈ AED 60,836
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⚠ Disclaimer: This calculator provides an estimate only, based on the general UAE private-sector framework under Federal Decree-Law No. 33 of 2021. It does not constitute legal advice. Individual entitlements may differ based on employment contract, applicable free-zone rules, special work models, unpaid absences, and other factors. Always verify your specific entitlement with your employer, MOHRE, or a qualified UAE employment lawyer.
Independence: Independent calculator — not affiliated with MOHRE, the UAE Government, Dubai Development Authority, or any government entity.

Official Sources

GovUAE Government Portal — u.aeMOHREMinistry of Human Resources — mohre.gov.ae
LawFederal Decree-Law No. 33 of 2021 — Article 51
Last reviewed: 2025-01-15 • Rule version: 2021-DL33 • Independent calculator — not affiliated with MOHRE, the UAE Government, Dubai Development Authority, or any government entity.

Calculation FAQs

How to calculate gratuity in UAE?

Under the general UAE private-sector framework: (1) Determine your last basic monthly salary. (2) Calculate your daily wage: monthly salary ÷ 30. (3) For the first 5 years of eligible service: multiply daily wage × 21 × number of years. (4) For service beyond 5 years: multiply daily wage × 30 × remaining years. (5) Add both amounts. (6) Apply the maximum cap (2 years' basic wage). Partial years are calculated proportionally. Use our calculator for an instant estimate.

How is UAE gratuity calculated?

UAE gratuity is calculated based on your last basic wage (not gross salary including allowances). Your daily wage is derived by dividing your monthly basic salary by 30. You then apply 21 days per year for the first 5 years and 30 days per year for service beyond 5 years. The result cannot exceed the equivalent of two years' basic wage.

What is the formula for calculating gratuity?

UAE gratuity formula (general private-sector framework): Daily wage = Monthly basic salary ÷ 30. For years 1–5: Gratuity = Daily wage × 21 × years served (up to 5). For years beyond 5: Gratuity = Daily wage × 30 × additional years. Total = First period + Second period (subject to 2-year wage cap). Partial years are calculated proportionally by days.

How do I calculate my gratuity amount?

Enter your basic monthly salary, joining date, and last working date into our UAE gratuity calculator. The calculator will immediately show your estimated gratuity, the full formula used, and a year-by-year breakdown. You can also download a PDF report of your calculation.

How do you calculate a gratuity?

In the UAE: identify your basic monthly salary (not total salary), determine your eligible service period in years and days, calculate your daily wage (monthly salary ÷ 30), apply 21 days per year for the first 5 years and 30 days per year thereafter, then total the amounts. Verify the result does not exceed the 2-year wage cap.

How do I calculate gratuity on my salary?

Your gratuity is calculated on your basic salary only — not your gross salary or total compensation. Housing allowance, transport allowance, and other standard allowances are not included. Enter only your basic monthly salary into the calculator.

Why is gratuity divided by 26 or 30?

In the UAE, the daily wage for gratuity purposes is calculated by dividing the monthly basic salary by 30 days. This is the UAE Labour Law standard. The figure 26 is used in India's Gratuity Act to derive daily wages based on 26 working days per month — this is an India-specific rule and does not apply in the UAE. See our UAE vs India comparison page for more information.

Why is 26 in gratuity calculation?

The number 26 appears in Indian gratuity calculations, not UAE calculations. Under India's Payment of Gratuity Act 1972, the formula uses 26 working days per month. In the UAE, the divisor is 30 days per month under UAE Labour Law. These are different legal systems with different rules.

Why is gratuity 4.81% of basic?

The 4.81% figure relates to Indian gratuity calculations, not UAE gratuity. In India, the formula (15/26) × number of years × monthly salary produces approximately 0.577 months per year, which is sometimes expressed as 4.81% of annual salary. This formula does not apply in the UAE. See our UAE vs India comparison for the correct UAE formula.

How to calculate gratuity in UAE for 2 years?

For 2 complete years of service: Daily wage = Monthly basic salary ÷ 30. Gratuity = Daily wage × 21 × 2. Example: AED 10,000 basic salary → Daily wage = AED 333.33. Gratuity = 333.33 × 21 × 2 = AED 14,000. Use our calculator for instant results.

How much gratuity do I get after 5 years?

After exactly 5 years: Daily wage = Monthly basic salary ÷ 30. Gratuity = Daily wage × 21 × 5. Example: AED 10,000 basic salary → Daily wage = AED 333.33. Gratuity = 333.33 × 21 × 5 = AED 35,000. Service beyond 5 years earns 30 days per year instead of 21.

How much gratuity do we get after 5 years in a company?

After exactly 5 years, you receive 21 days' basic wage for each of those 5 years. If your basic salary is AED 10,000, your daily wage is AED 333.33 and your gratuity would be approximately AED 35,000. Any service beyond 5 years earns a higher rate of 30 days per year.

How much gratuity after 8 years?

For 8 years of service: First 5 years at 21 days/year + 3 additional years at 30 days/year. Example: AED 10,000 basic salary → Daily wage = AED 333.33. First 5 years: 333.33 × 21 × 5 = AED 35,000. Next 3 years: 333.33 × 30 × 3 = AED 30,000. Total ≈ AED 65,000. Use our calculator for your specific dates.

How to calculate 4 years gratuity in UAE?

For 4 complete years: Daily wage = Monthly basic salary ÷ 30. Gratuity = Daily wage × 21 × 4. Example: AED 8,000 basic salary → Daily wage = AED 266.67. Gratuity = 266.67 × 21 × 4 = AED 22,400. Partial years beyond complete years are added proportionally.

Is how 7 years 7 months gratuity calculated?

For 7 years 7 months: First 5 years at 21 days/year + 2 years 7 months at 30 days/year. The 7-month partial year = 30 days × (7/12). Example: AED 10,000 basic salary → Daily wage = AED 333.33. First 5 years: 333.33 × 21 × 5 = AED 35,000. 2 complete years beyond 5: 333.33 × 30 × 2 = AED 20,000. 7 months: 333.33 × 30 × (7/12) ≈ AED 5,833. Total ≈ AED 60,833. Use our calculator for a precise breakdown.

How is partial service calculated?

Partial years are calculated proportionally based on days. For service within the first 5 years: daily wage × 21 × (days in partial year / 365). For service beyond 5 years: daily wage × 30 × (days in partial year / 365). Our calculator handles leap years and edge cases automatically.

Worked Examples

Multiple scenarios fully calculated.

Basic Salary Guide

What counts as basic salary.

UAE Gratuity Rules

Full legal framework.

Eligibility Guide

Who qualifies and when.