How UAE gratuity is calculated
Under Article 51 of Federal Decree-Law No. 33 of 2021 (in force since 2 February 2022), a full-time private-sector employee who completes at least one year of continuous service is entitled to:
Key facts at a glance
- 21 days of basic salary per year for the first 5 years, 30 days per year after
- Daily rate = basic salary ÷ 30 — total capped at 2 years' basic salary
- Minimum 1 year of continuous service; resignation no longer reduces gratuity (law effective Feb 2022)
- DIFC (DEWS) and ADGM are excluded — this formula covers mainland and federal-law free zones
- 21 days of basic salary for each of the first five years of service
- 30 days of basic salary for each year of service beyond five
- Daily wage = monthly basic salary ÷ 30 · Part years paid pro-rata
- Total capped at two years' basic salary · Unpaid leave excluded
Worked example
Basic salary AED 8,000, exactly 7 years of service.
Daily basic = 8,000 ÷ 30 = AED 266.67
First five years: 5 × 21 × 266.67 = AED 28,000
Years six and seven: 2 × 30 × 266.67 = AED 16,000
Total gratuity: AED 44,000
Why most online calculators get it wrong
Many calculators still apply the old 1980 labour law, which cut gratuity to one-third or two-thirds if you resigned early. That rule was abolished in 2022 — this calculator uses the current formula only. Another common error: using total salary instead of basic salary, which inflates the result.
Who this doesn't cover
- DIFC — gratuity replaced by the DEWS savings scheme
- ADGM — own Employment Regulations apply
- Domestic workers — covered by Federal Law No. 10 of 2017
- UAE nationals — pension system instead of gratuity
Common mistakes to avoid
- Using total salary instead of basic. Allowances for housing, transport and phone are excluded by law. A AED 12,000 package with a AED 6,000 basic produces half the gratuity most people expect — see our basic vs gross salary breakdown.
- Applying the old resignation penalty. Pre-2022 rules cut gratuity to one-third or two-thirds on resignation. That was abolished by Federal Decree-Law 33/2021 — resignation now pays the full amount after one year of service.
- Ignoring unpaid leave. Unpaid absence days are subtracted from your service period. Even two weeks of unpaid leave slightly reduces the pro-rata result.
- Rounding part-years up or down. Service is counted day by day — 4 years and 8 months is 4.667 years, not 4 or 5. Rounding costs you either way.
- Forgetting the 2-year cap. Gratuity can never exceed two years of basic salary, no matter how long you served. Very long-serving employees should verify the cap hasn't been applied twice or missed.
- Assuming free-zone coverage. DIFC (DEWS) and ADGM use their own schemes. Applying the 21/30-day formula there gives a meaningless number.
Pro tips
- Pull the basic figure from your MOHRE contract, not your offer letter or payslip summary — the contract figure is the legal one.
- Confirm your exact start date. Service runs from your actual joining date; a week of onboarding before your official start still counts if you were on payroll.
- Run the numbers before you resign. Knowing your entitlement in advance lets you negotiate your last working day — even a few extra weeks of service add pro-rata value.
- Combine with leave encashment. Unused annual leave is paid at basic ÷ 30 per day and stacks on top of gratuity — run both through our final settlement calculator before signing anything.
- Get the breakdown in writing. Ask HR for a line-by-line gratuity statement (daily rate, service days, bands applied) and compare it against your own calculation before accepting.
- Act fast if payment is late. The 14-day deadline in Article 53 is strict — raise it formally in writing as soon as it passes, and keep every payslip and contract copy.
Second worked example: part-year service
Basic salary AED 12,000, service of 4 years and 8 months (4.667 years — all inside the first-five-year band).
Daily basic = 12,000 ÷ 30 = AED 400
Entitlement days = 4.667 × 21 = 98 days
Gratuity = 98 × 400 = AED 39,200
Note how the 8 months add real value: rounding down to 4 years would have given only AED 33,600.
Related tools
Leaving your job? Get the complete picture:
UAE Final Settlement Calculator →
Gratuity + unused leave encashment + notice pay + unpaid salary — everything your employer owes, in one calculation.
UAE End-of-Service Guide →
The full picture: gratuity rules, leave encashment, notice pay and the 14-day payment rule.
Leave Salary Calculation →
How unused annual leave is encashed — the part of your settlement most people miscalculate.
Notice Period Pay →
Who owes notice pay when a contract ends, and how it is calculated on gross salary.