End of Service Benefit Calculator — UAE
Calculate end-of-service gratuity in the UAE under Federal Decree-Law No. 33 of 2021. The benefit is based on basic salary, years of service, and reason for leaving. Both expatriates and UAE nationals are entitled to gratuity (though UAE nationals also have GPSSA).
What Is End of Service Benefit in the UAE?
End-of-service benefit (commonly called "gratuity") is a lump-sum payment required by UAE labour law when an employment relationship ends. It is calculated on the employee's basic salary and length of service — not on allowances or bonuses.
The rules were updated in February 2022 under Federal Decree-Law No. 33 of 2021, which replaced the older Federal Law No. 8 of 1980. The new law simplified the calculation and removed the 1/3, 2/3, and full entitlement tiers that previously depended on the reason for leaving — gratuity is now paid in full when the employee completes 1 year of service (with a partial reduction for resignation in some cases; see below).
UAE Gratuity Formula
For years of service ≤ 5:
Gratuity = Years × (21 days ÷ 30 days) × Monthly Basic Salary
For years of service > 5:
Gratuity = (5 × 21 days ÷ 30) × Monthly Basic Salary
+ (Years − 5) × (30 days ÷ 30) × Monthly Basic Salary
In simpler terms:
- First 5 years — 21 days' basic salary per year (equivalent to 0.7 months per year)
- After 5 years — 30 days' basic salary per year (equivalent to 1 month per year)
- Maximum — total gratuity is capped at 2 years' total salary
Resignation — Reduction Rules
Under the new law, gratuity is paid in full on termination and end of contract. For resignation, the gratuity may be reduced depending on years of service — though the new law has simplified this compared to the old rules:
- Less than 1 year — no gratuity
- 1–5 years — reduced by 1/3 (i.e., 2/3 of calculated amount)
- 5+ years — full gratuity
Important note — for limited contracts (2–3 year contracts), gratuity is paid in full at the end of the contract, regardless of whether the employee resigns or the employer terminates. For unlimited contracts, resignation rules apply as above. This calculator applies the resignation reduction regardless of contract type — verify with the specific contract terms and current MOHRE guidance for your situation.
Worked Example
5 years of service, AED 15,000 basic salary, terminated by employer:
Gratuity = 5 × (21 ÷ 30) × 15,000 = 5 × 0.7 × 15,000 = AED 52,500
10 years of service, AED 15,000 basic salary, terminated by employer:
First 5 years = 5 × 0.7 × 15,000 = AED 52,500
After 5 years = 5 × 1.0 × 15,000 = AED 75,000
Total = AED 127,500
Cap = 2 years' total salary = AED 360,000 — not reached, so full amount is paid.
Same employee resigns after 10 years:
5+ years of service → full gratuity = AED 127,500
Resigns after 3 years:
Calculated gratuity = 3 × 0.7 × 15,000 = AED 31,500
Resignation after 1–5 years → 2/3 × 31,500 = AED 21,000
Frequently Asked Questions
What salary is used for gratuity calculation?
Gratuity is calculated on basic salary only — not on housing, transport, or other allowances. This is a key difference from Saudi Arabia, where "wage" includes regular allowances. In the UAE, employers often structure compensation with a low basic salary and high allowances to reduce gratuity costs. If your basic is AED 8,000 and allowances are AED 12,000, your gratuity is based on the AED 8,000 only.
Does gratuity apply to UAE nationals?
Yes, gratuity applies to UAE nationals too, but they also participate in GPSSA (the national pension scheme). The gratuity is calculated on the same formula. However, if the employee's service has been transferred to another employer with GPSSA consent, the gratuity may be adjusted. In practice, most UAE nationals receive GPSSA pension benefits rather than gratuity once they have sufficient service. Consult a legal advisor for nationality-specific cases.
Is gratuity taxable in the UAE?
The UAE has no personal income tax, so gratuity is not taxed when received. When transferring gratuity to another country, local tax rules of that country may apply. For expatriates returning home, gratuity is treated as a lump sum benefit and may or may not be taxable depending on the home country's rules. Check with a local tax advisor before transferring funds internationally.
What happens to gratuity during probation or short service?
Employees with less than 1 year of continuous service are not entitled to gratuity. Service is counted from the start of the employment contract. The UAE probation period (up to 6 months) counts as service. If employment ends during probation or within the first 12 months, no gratuity is due — unless the contract specifies otherwise. Some companies offer discretionary benefits; these are separate from statutory gratuity.
Can my employer refuse to pay gratuity?
Gratuity is a statutory right, not a discretionary benefit. Employers are legally required to pay it within 14 days of the end of employment under UAE labour law. If an employer refuses to pay, the employee can file a complaint with MOHRE (Ministry of Human Resources and Emiratisation). MOHRE mediates free of charge and can escalate to the labour courts. Non-payment of gratuity is a common workplace complaint and labour courts generally rule in favour of employees when the facts are clear.
How does the end-of-service gratuity compare to Saudi Arabia?
Both countries have similar structures: half a month per year for the first 5 years and one month per year after that. But there are important differences:
- Saudi Arabia — "wage" includes basic + regular allowances (housing, transport). Graticity is therefore higher.
- UAE — gratuity based on basic salary only. Allowances excluded. Lower gratuity.
- Saudi Arabia — resignation reduces gratuity by 1/3 (under 5 years), 1/3 (5–10 years), or nothing (10+ years). New UAE law removed most of these tiers for 5+ years.
- UAE — resignation reduces gratuity for 1–5 years of service (2/3 of calculated), but full for 5+ years.