Your UAE Gratuity Explained: What You Need to Know Before Leaving
May 9, 2025
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Leaving a job in the UAE? Whether you're moving on to a new opportunity within the Emirates or heading elsewhere, understanding your end-of-service benefits is absolutely crucial. For many expatriate employees in the private sector, the most significant part of this final settlement is the 'gratuity' payment 
[8]
[11]. Think of it as a thank-you payment for your service. This payment is governed by the UAE's comprehensive labour legislation, specifically Federal Decree Law No. 33 of 2021, often called the "New Labour Law," which came into effect in February 2022 
[1]
[2]
[7]
[9]
[14]
[15]. This guide is here to walk you through exactly what gratuity is, who qualifies, how it's calculated using your basic salary and the 21/30 day rule, when you should expect payment, and some key updates under the current law 
[5][8]
[13]
[17]. Knowing your rights regarding this statutory payment ensures you receive what you're entitled to 
[3]
[10]
[12]
[16].
What is UAE End-of-Service Gratuity?
So, what exactly is this end-of-service gratuity? It's a mandatory payment required by UAE Labour Law, specifically detailed in Article 51 of the New Labour Law 
[18][5][13]. Essentially, it's designed as a reward and recognition from your employer for the time and effort you've dedicated during your service tenure [11]. This benefit primarily applies to foreign workers employed in the UAE's private sector [18][5][8][17]. UAE Nationals usually fall under different pension and social security regulations for their end-of-service entitlements [18][3][17]. The Ministry of Human Resources and Emiratisation (MoHRE) is the government body responsible for overseeing the implementation and enforcement of the labour law, including gratuity provisions [2][16].
Are You Eligible for Gratuity? Key Requirements
Not everyone automatically qualifies for gratuity. The main requirement for foreign employees working full-time in the private sector is completing one year or more of continuous service with the same employer [18][5]
[6][8][13][17][14]. Let's be clear: if your total service period is less than one full year, you unfortunately won't be entitled to any gratuity payment [5][6][17]. How is this service duration calculated? It’s based on the actual days you worked [5][8][13]. Any periods where you were absent without pay are excluded from this calculation [5][8][13]. However, time taken for legally required paid leave, like your annual vacation, sick leave, or maternity leave, does count towards your continuous service period [13]. These rules primarily apply to full-time workers, though we'll touch on part-time arrangements later [18][5][6][8][13][17][14].
How to Calculate Your UAE Gratuity Payment
Alright, let's get down to the numbers. How is your gratuity actually calculated?
The Foundation: Basic Salary Only
This is perhaps the most critical point: your gratuity calculation is based only on your last basic salary before your employment ends [18][5][6][8][11][13][17]. It's really important to remember that any allowances you receive – like housing, transport, utilities, phone, or anything else – are not included in this calculation [5][17]. Check your employment contract to see the breakdown between your basic salary and allowances [18].
The Core Formula: The 21/30 Day Rule
•
For your first five years of service: You are entitled to 21 days' basic salary for each year you worked.
•
For any service beyond five years: Your entitlement increases to 30 days' basic salary for each additional year (year six, year seven, and so on).
Step-by-Step Calculation Example:
Let's imagine an employee, Fatima, has worked for a company for 7 continuous years and her final basic monthly salary is AED 10,000.
•
Step 1: Calculate her daily basic wage. A common method is Monthly Basic Salary / 30 days. So, AED 10,000 / 30 = AED 333.33 per day [8].
•
Step 2: Calculate gratuity for the first 5 years: 5 years 21 days/year AED 333.33/day = AED 35,000 (approx.) [8].
•
Step 3: Calculate gratuity for the remaining 2 years (years 6 and 7): 2 years 30 days/year AED 333.33/day = AED 20,000 (approx.) [8].
Calculating for Partial Years:
Is There a Maximum Limit?
Gratuity for Part-Time and Other Work Patterns
The New Labour Law recognizes various work models beyond traditional full-time employment, such as part-time, temporary, and flexible work [2][7][15]. How does gratuity work for them? For part-time or job-sharing employees, gratuity is calculated proportionally [3]
[4][5]. This is typically based on the ratio of hours worked under the part-time contract compared to standard full-time hours (often considered 2,080 hours per year) [3][4][5][6]. For temporary work, gratuity generally isn't applicable if the employment lasts less than one year [3][4]. The specific details for these calculations are outlined in the Executive Regulations of the Labour Law [3][4][5].
Major Changes Under the New Labour Law You MUST Know
The New Labour Law introduced some very significant changes regarding gratuity that every employee should be aware of. Here’s the big news:
Crucial Update: No Forfeiture for Dismissal (Article 44)
Under the previous labour law, if an employee was dismissed for gross misconduct (under the old Article 120), they usually forfeited their entire gratuity entitlement [1]. This has changed completely. Under the New Labour Law (Article 44 detailing reasons for dismissal without notice), an employee no longer loses their right to gratuity even if dismissed for such reasons, provided they have completed the minimum one year of service [1][7]. This is a major shift protecting employee benefits.
No Reduction for Resignation
Similarly, the old system sometimes involved reductions in gratuity if an employee resigned from an 'unlimited' contract before completing five years [7]. With the move to fixed-term contracts for everyone under the new law, these resignation-based reductions have been eliminated [7]. The bottom line now is simple: if you are eligible for gratuity (meaning you've completed one year or more of continuous service), you are entitled to your full calculated amount, regardless of whether you resign or your employment is terminated by the employer (even under Article 44) [7].
Payment Deadline: When Will You Receive Your Gratuity?
Timing is everything, right? The law is very clear on this. Employers are legally required to pay all end-of-service entitlements, which includes your calculated gratuity, within 14 days from your official last working day (the end date of your contract) [5][7][17]. This is a strict deadline. Employers who fail to meet this 14-day payment window can face penalties from MoHRE [7]. So, keep an eye on the calendar after your last day.
Can Your Employer Deduct Money from Your Gratuity?
While your gratuity entitlement is protected, there is one scenario where deductions can be made. Yes, your employer is legally permitted to deduct any amounts that you, the employee, owe directly to the employer [18][5][13][17]. This could include things like outstanding repayments for a company loan provided to you [18]. These deductions must be legally justifiable and documented.
Alternative End-of-Service Schemes (Brief Overview)
It's worth knowing that the UAE framework allows for alternative end-of-service benefit schemes, often set up as savings or investment funds approved by MoHRE [5][13][17]. If your employer decides to implement such an approved scheme for certain employee categories, participation might become mandatory for those covered [5][17]. In these schemes, the employer makes regular contributions (often a percentage of basic salary, like 5.83% for under 5 years service, 8.33% for 5+ years) into the fund instead of accruing the traditional gratuity liability [5][6][17]. Importantly, any gratuity you had already earned up to the point of joining the new scheme must be protected and preserved [5][6].
Frequently Asked Questions
Is gratuity based on basic or total salary?
What's the minimum service needed to get gratuity?
Do I still get gratuity if I resign?
Yes. Under the New Labour Law, if you have completed one year or more of service, you are entitled to your full calculated gratuity even if you resign [7].
Do I lose my gratuity if I'm fired for misconduct (Article 44)?
How soon must my employer pay my gratuity?
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