UAE Labour Law & Gratuity

The Current Law: Federal Decree-Law No. 33 of 2021

UAE private-sector labour relations are governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, which came into force on 2 February 2022. This law, together with its implementing Cabinet and Ministerial resolutions, forms the primary legal framework for employment and end-of-service benefits in the UAE private sector.

Article 51: End-of-Service Gratuity

Article 51 of Federal Decree-Law No. 33 of 2021 sets out the general end-of-service gratuity entitlement for qualifying workers in the private sector. Without reproducing the full text of the law, the key principles established are:

• A minimum period of continuous service (one year) is required to trigger the standard entitlement
• Gratuity is calculated based on the worker's last basic wage
• The rate is 21 calendar days' wage per year for the first 5 years of service
• The rate increases to 30 calendar days' wage per year for service beyond 5 years
• Partial years beyond complete years are calculated proportionally
• Total gratuity is subject to a statutory maximum of two years' basic wage
• Periods of approved unpaid absence may be excluded from the service calculation

For the authoritative text of the law, refer to the official UAE legislation repositories via MOHRE or the UAE Government portal.

What Changed from the Previous Law

The previous law (Federal Law No. 8 of 1980) included:

• Limited and unlimited contract types — these contract categories determined many employment rights, including gratuity entitlement on resignation. Under the 1980 law, resignation from an unlimited contract resulted in reduced gratuity (1/3 after 1–3 years, 2/3 after 3–5 years, full after 5+ years).
• Resignation penalty on limited contracts — different rules applied when an employee left before a fixed-term contract expired.

Under Federal Decree-Law No. 33 of 2021:

• The limited/unlimited contract distinction was replaced with new work model categories (full-time, part-time, temporary, flexible, remote, shared-work).
• The reduced gratuity framework for resignation under unlimited contracts was replaced by the general entitlement framework, so resignation after the minimum service period generally now triggers the standard gratuity entitlement.
• Implementing resolutions have provided additional detail on work model rules, domestic worker provisions, and other matters.

Historical Contract Terminology

The terms "unlimited contract" and "limited contract" are now historical in the context of the current general UAE private-sector law. They continue to appear in online searches because many workers still associate them with their UAE employment experience.

See our dedicated pages for historical context:

• Unlimited Contract Gratuity (Historical)
• Limited Contract Gratuity (Historical)

Other Relevant Articles

Beyond Article 51, other provisions of Federal Decree-Law No. 33 of 2021 that may affect gratuity or end-of-service benefits include:

• Article 53: Addresses cases where gratuity entitlement may be affected by the reason for termination
• Articles covering work model definitions (full-time, part-time, etc.)
• Articles covering unpaid leave and its impact on service continuity
• Articles on final settlement and payment timelines

For the complete legal text, refer to the official UAE legislation available through MOHRE or the UAE Government portal. This page provides only a general summary for informational purposes.

Domestic Workers

Domestic workers are not governed by Federal Decree-Law No. 33 of 2021. They are subject to a separate legal framework. See ourdomestic worker gratuity page.