UAE vs India Gratuity Calculation
UAE and India have completely different gratuity systems. If you are searching for UAE gratuity rules, this page clarifies which rules apply to you and why the formulas differ significantly.
Side-by-Side Comparison
| Feature | UAE | India |
|---|---|---|
| Governing Law | Federal Decree-Law No. 33 of 2021 (Article 51) | Payment of Gratuity Act, 1972 |
| Minimum Service | 1 complete year (365 days) | 5 years (with some exceptions: 4 years 240 days debated) |
| Divisor for Daily Wage | 30 days | 26 working days |
| Formula | Daily wage × 21 days/yr (first 5 yrs); then × 30 days/yr | (15 × last salary × years) ÷ 26 |
| Rate per Year | 21 days (first 5 yrs) / 30 days (beyond 5 yrs) | 15 days per year (uniform) |
| Maximum Cap | 2 years' basic wage (no fixed AED ceiling) | INR 20,00,000 (20 lakhs) — tax-free limit |
| Salary Basis | Last basic wage (allowances excluded) | Last drawn basic + dearness allowance |
| Currency | AED (UAE Dirham) | INR (Indian Rupee) |
| % of Annual Salary | ~5.83% per year (first 5 yrs); ~8.33% per yr beyond 5 yrs | ~4.81% per year (15/26 × 1/12) |
| Eligibility on Resignation | Yes (after 1 year under current law) | Yes (after 5 years under the Act) |
Why Do People Confuse UAE and India Gratuity?
A large proportion of UAE's private-sector workforce consists of Indian nationals. Many Indian workers are familiar with India's Payment of Gratuity Act and sometimes apply Indian rules — such as the 26-day divisor or the 4.81% calculation — to their UAE employment situation. This produces incorrect estimates.
Additionally, many online search results for "gratuity calculator" return India-specific calculators. Always ensure you are using a UAE-specific tool when working in the UAE.
The "26 vs 30" Divisor Explained
In UAE: The daily wage is calculated by dividing the monthly basic salary by 30. This is specified in UAE Labour Law and is consistent with a 30-calendar-day month convention.
In India: The Payment of Gratuity Act uses 26 as the divisor, representing 26 working days per month (30 calendar days minus 4 Sundays). This produces a higher daily wage, but gratuity is only earned at 15 days per year rather than the UAE's 21 or 30 days.
The "4.81%" Figure
The 4.81% figure is an India-specific shortcut derived from the Indian formula: (15 ÷ 26) × (1 ÷ 12) × 100 ≈ 4.81% of annual salary per year of service. This figure has no application in UAE gratuity calculations and should not be used for UAE employment.
The "20 Lakhs" Maximum
INR 20,00,000 (20 lakhs) is the maximum tax-free gratuity limit under India's Payment of Gratuity Act for most employers. This is an India-specific figure denominated in Indian Rupees and has no relevance to UAE gratuity calculations.
The UAE maximum cap is 2 years' basic wage — for example, AED 10,000/month basic salary = AED 240,000 maximum gratuity.
Worked Example: Same Scenario, Two Systems
India rules only — not applicable in UAE.
Indian Workers in the UAE
If you are an Indian national working in the UAE under a UAE employment contract, the UAE rules apply — not the Indian Payment of Gratuity Act. Your gratuity is governed by UAE Labour Law (Federal Decree-Law No. 33 of 2021), enforced by MOHRE, and payable in AED.
Your Indian gratuity rights (if any) from previous Indian employment would be entirely separate from your UAE entitlement and governed by Indian law.
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.aeUAE vs India Gratuity FAQs
What is the latest gratuity calculator for 2026 in India?
This website covers UAE gratuity only. India's gratuity is governed by the Payment of Gratuity Act 1972 and uses a different formula (15/26 × monthly salary × years of service). India has also discussed increasing the maximum gratuity limit. For Indian gratuity information, consult an India-specific resource. See our UAE vs India comparison page for a clear explanation of the differences.
Who will get 20 lakhs gratuity?
The "20 lakhs" gratuity figure refers to India's Payment of Gratuity Act, where INR 20,00,000 (20 lakhs) is the maximum tax-free gratuity under Indian law. This does not apply in the UAE. UAE gratuity is governed by UAE Labour Law and calculated in AED. See our UAE vs India comparison page for a detailed breakdown of the differences.
How do I calculate gratuity in India for 2026?
This website is specifically for UAE gratuity calculations. Indian gratuity is calculated under the Payment of Gratuity Act 1972 using: (15 × monthly salary × years of service) ÷ 26. Please use an India-specific gratuity calculator for Indian calculations. Our UAE vs India comparison page explains the key differences.
How do I calculate gratuity in Excel?
For UAE gratuity in Excel: Daily wage = B2/30 (where B2 = monthly basic salary). First 5 years amount = IF(years>=5, daily_wage*21*5, daily_wage*21*years). Beyond 5 years = IF(years>5, daily_wage*30*(years-5), 0). Total = MIN(first_period + second_period, monthly_salary*12*2). However, our online calculator handles all edge cases automatically including partial years, leap years, and the cap.