In this guide
TL;DRThe short version
- Gratuity is a lump sum your employer owes you when a private-sector contract ends — but only once you have completed one full year of service.
- It is built on your basic salary alone, not your total package: 21 days of basic pay for each of your first five years, then 30 days a year after that, capped at two years' wages.
- Since the 2022 labour law, resigning and being terminated pay the same — the old resignation penalty is gone.
- Your employer must settle gratuity, final salary and untaken leave within 14 days of your last day; MOHRE handles disputes.
- Check the figure yourself: basic salary divided by 30, times the days you have earned. Most gaps come from confusing basic pay with total pay.
Who qualifies, how the lump sum is calculated, what the 2022 labour law changed, and when your employer has to pay — end-of-service gratuity in plain English.
Leaving a job in the UAE comes with a payment many new residents forget to plan for: end-of-service gratuity, a lump sum your employer owes you when a private-sector contract ends. The rule of thumb is simple, work at least one year and you are owed a slice of basic pay for every year you stayed.
This guide explains who qualifies, how the sum is worked out, what changed under the current labour law, when the money must reach you, and how to estimate your own figure before you hand in your notice.
Who qualifies for gratuity
Gratuity is a right under the UAE Labour Law, Federal Decree-Law No. 33 of 2021, which took effect on 2 February 2022. It applies to private-sector staff once they have completed one full year of continuous service with the same employer. Anyone who leaves before that first anniversary walks away with nothing.
The payment rests on your basic salary alone. Allowances for housing, transport, phone and the rest are stripped out first, so your gratuity is usually well below a month of your total package for each year served. Check your contract for the basic figure before you do any sums; it is often half or less of what lands in your account each month.
How your gratuity is worked out
The formula rewards length of service in steps. For each of your first five years you earn 21 days of basic pay, and for every year beyond five you earn 30 days of basic pay. One ceiling applies: your total gratuity can never exceed the equivalent of two years of basic wages, however long you stay.
| Length of service | What you earn each year |
|---|---|
| The first five years | 21 days of basic pay |
| Every year beyond five | 30 days of basic pay |
| The hard ceiling | two years of basic wages, in total |
Here is the math in practice. Say your basic salary is 10,000 dirhams a month, which is about 333 dirhams a day. After four years you are owed 21 days for each year, or 84 days in all, which is roughly 28,000 dirhams. Stay eight years on the same basic pay and you earn 21 days for the first five years plus 30 days for each of the next three, which comes to about 65,000 dirhams.
Part-years count too. Once you pass the one-year mark, each extra month and day is paid pro rata, so leaving at four years and six months earns you half a year more on top of the four.
Resignation or termination, the sum is now the same
This is the change most residents miss. Under the old law, staff who resigned from an open-ended contract lost part of their gratuity: a third of it between one and three years of service, and two-thirds between three and five years. The current law scrapped that penalty. Today, whether you resign or your employer ends the contract, you receive the same full gratuity, as long as you have served your year.
The same law also phased out open-ended contracts. Every private-sector job now runs on a fixed-term contract, renewed as needed, and gratuity builds the same way across each renewal.
What counts as your service
Your service clock runs from your first day to your last working day, paid annual leave included. Days of unpaid leave are the main exception: they are left out of the total, so a long unpaid break pushes back the years you are counting. Notice periods you actually work count in full.
If you move to a new employer, the clock resets; gratuity is paid per employer, not as a lifetime tally. Transferring within the same company or group usually preserves your service, but get that confirmed in writing before you agree to the move.
When you get paid, and what can be held back
Your employer must settle gratuity, along with any unpaid wages and untaken leave, within 14 days of your contract ending. Miss that window and you can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE), the body that handles private-sector labour disputes.
A few things can be deducted before you are paid. Money you genuinely owe the company, such as an unpaid loan, a salary advance, or losses you are contractually liable for, can be taken from the gratuity. Your visa being cancelled is part of the same exit process and is not a reason to delay the payment.
Work out your own number
You can sanity-check any employer's figure in four steps:
- Find your basic salary on your contract, not your total monthly pay.
- Divide it by 30 to get a daily rate.
- Add up your days: 21 days for each of the first five years, then 30 days for every year after.
- Multiply days by your daily rate, and cap the result at two years of basic pay.
Plenty of official and bank calculators will run these numbers for you, but the steps above let you check their answer rather than trust it blind. If your figure and the company's are far apart, the gap is almost always the basic-versus-total-salary trap.
Gratuity is money you have already earned by staying, so treat it as part of your pay rather than a bonus. Knowing the formula before you resign means you can catch a short payment on the day, not months later.