UAE · Employment · Verified September 22, 2026
For most foreign full-time employees covered by the UAE federal private-sector labour law, end-of-service gratuity is based on your final basic salary, not your total package. After one year of continuous service, the standard formula is 21 days of basic wage per year for the first five years and 30 days per year after that.
The standard gratuity formula
- Less than 1 year: no statutory gratuity under the standard formula.
- 1 to 5 years: 21 days of basic wage for each year.
- More than 5 years: 21 days per year for the first five years, then 30 days per year for each additional year.
- Maximum: total statutory gratuity cannot exceed two years’ wage.
Use basic salary, not total monthly pay
The UAE Government and MOHRE both state that the calculation uses the last basic wage due to the employee. Housing, transport, utilities and other allowances are not added to the gratuity calculation.
A simple example
If your basic salary is AED 9,000 per month, a simplified daily basic wage is AED 300 when using a 30-day month. For three completed years, the standard calculation would be 21 days × AED 300 × 3 = AED 18,900, before any lawful deductions or adjustments.
For service beyond five years, the first five years stay at the 21-day rate and later years use the 30-day rate.
Do partial years count?
Yes, once you have completed at least one year of continuous service, the law provides for proportional gratuity for fractions of a year. Days of unpaid absence are excluded from the service period used for the calculation.
When should it be paid?
The UAE Government says employers must pay outstanding wages, other entitlements and gratuity within 14 days after the employment relationship ends. Lawful amounts owed by the employee can be deducted where permitted.
What about the alternative Savings Scheme?
The UAE also has an optional alternative end-of-service benefits system. Participating employers can register selected employees and make monthly contributions to approved investment funds. MOHRE says entitlements accrued before enrolment are preserved, while the registered period is handled under the savings-scheme rules. If your employer has enrolled you, do not calculate the entire employment period using only the traditional formula.
Who should be careful with this guide?
This article explains the standard federal private-sector framework. Domestic workers, government employees and workers in jurisdictions with separate employment regimes can have different rules. Check which employment law applies to your contract before relying on the calculation.
Five gratuity mistakes to avoid
- Using total salary instead of basic salary.
- Counting unpaid absence as service time.
- Applying 30 days per year to the first five years.
- Ignoring the optional Savings Scheme if your employer enrolled you.
- Assuming the federal private-sector formula applies to every UAE employment regime.
Official sources checked
- UAE Government — private-sector end-of-service benefits
- MOHRE — worker rights and gratuity formula
- MOHRE — alternative Savings Scheme
