After years of hard work in the UAE, your end-of-service pay is money you’ve earned. Knowing how it’s calculated helps you plan your next step and check that your final settlement is correct.
Here’s how gratuity works for most private-sector workers.
When You Qualify for Gratuity
Gratuity generally applies once you complete at least one year of continuous service with your employer in the UAE private sector.
If you leave before reaching one full year, you usually won’t receive gratuity.
Use Your Basic Salary, Not Your Full Package
Many workers make this mistake. Gratuity is based on your last basic salary, not the total amount you receive each month.
Allowances for housing, transport and similar benefits are usually not included.
For example, say you take home AED 5,500 a month, but your contract shows:
- Basic salary: AED 3,000
- Allowances: AED 2,500
Your gratuity would be calculated using AED 3,000.
Check your employment contract to confirm your exact basic salary.
The Standard Gratuity Formula
|
Years of service |
Gratuity |
|---|---|
|
Less than 1 year |
None |
|
1 to 5 years |
21 days of basic salary for each year |
|
More than 5 years |
21 days per year for the first 5 years, plus 30 days per year after that |
|
Maximum |
Cannot exceed 2 years’ wage |
To get your daily basic wage, divide your monthly basic salary by 30.
Other Rules to Keep in Mind
- Partial years count. After one full year, extra months may be counted proportionately. If you worked 3 years and 4 months, those 4 months can be included.
- Unpaid absences don’t count. Days of unpaid leave are removed from your total service period.
- There’s a cap. Your total gratuity can’t go over the equivalent of two years’ wage.
Example 1: Working 4 Years
Basic salary: AED 3,000
- Daily wage: AED 3,000 ÷ 30 = AED 100
- One year of gratuity: AED 100 × 21 = AED 2,100
- Four years: AED 2,100 × 4 = AED 8,400
Estimated gratuity: AED 8,400
Example 2: Working 8 Years
Basic salary: AED 5,000
- Daily wage: AED 5,000 ÷ 30 = AED 166.67
- First 5 years: AED 166.67 × 21 × 5 = about AED 17,500
- Next 3 years: AED 166.67 × 30 × 3 = about AED 15,000
Estimated gratuity: AED 17,500 + AED 15,000 = AED 32,500
Check If Your Employer Uses the Savings Scheme
Some UAE companies join a voluntary end-of-service savings scheme. Instead of paying one lump sum when you leave, the employer makes monthly contributions into an approved fund.
If your company is part of this scheme, your benefit may be handled differently. Ask your HR team which system applies to you.
Domestic Workers Follow Separate Rules
If you work as a domestic helper, such as a nanny, housemaid or family driver, a different law covers your gratuity. The formula above may not apply to you, so check the rules for domestic workers.
Final Settlement and Disputes
Your final settlement may include more than gratuity, such as unpaid salary and unused leave. Payment timelines are set by UAE law, so confirm them with official sources.
If your employer’s figures don’t match yours, or payment is delayed, contact the Ministry of Human Resources and Emiratisation (MoHRE) for help.
Before You Sign Your Final Settlement
Take a few minutes to review:
- Your basic salary as written in your contract
- Your exact start and end dates
- Any unpaid leave you took
- Whether your employer uses the savings scheme
- Whether the final amount matches your own calculation
The examples in this guide are estimates. Rules can change, and every contract is different, so always verify your entitlement with MoHRE or other official UAE sources before accepting your final pay.
Disclaimer: This post is for general information only and does not constitute legal advice. For concerns specific to your employment situation, we encourage you to reach out to the Ministry of Human Resources and Emiratisation (MoHRE) or consult a qualified legal professional in the UAE.