Do I get gratuity if I resign in the UAE?

Yes, if you have at least one year of continuous service. Federal Decree-Law No. 33 of 2021 removed the old rule that cut gratuity by a third or two-thirds for staff who resigned early under unlimited contracts. Under Article 51 the same formula applies whether you resign, are let go or your fixed-term contract ends, though the employer may deduct amounts you owe under the law or a court judgment.

Is gratuity paid for less than one year of service?

No. A foreign worker needs at least one year of continuous service before any gratuity is due. Once that year is complete, part years are paid in proportion, so 1 year and 3 months earns gratuity for 1.25 years. Someone leaving after 11 months receives final wages, unused leave and notice pay where relevant, but no end-of-service gratuity.

Is UAE gratuity based on basic salary or total salary?

On basic salary. Article 51 of the Labour Law calculates gratuity on the last basic wage, and the law defines basic wage as the contractual wage excluding allowances and benefits in kind. That is why the split between basic pay and allowances in your contract matters so much: a low basic share means a lower gratuity, whatever your total package.

When must the employer pay gratuity?

Within 14 days of the end of the contract, together with final wages and other dues, under Article 53 of the Labour Law. If it is not paid, the worker can file a claim with MOHRE. MOHRE can decide claims up to AED 50,000 itself, and labour claims must be brought within two years of termination.

Do Emiratis receive end-of-service gratuity?

Not under the 21/30-day formula. Article 51 says UAE national workers receive end-of-service benefits under the pension and social security legislation instead, which means GPSSA (or the Abu Dhabi Pension Fund in Abu Dhabi). The employer pays monthly pension contributions during employment rather than a lump-sum gratuity at the end.

HR, payroll & labour

Gratuity Calculation in the UAE (2026): The 21/30-Day Formula, the Cap and Worked AED Examples

How to calculate end-of-service gratuity in the UAE in 2026: 21 then 30 days' basic pay per year, part years, the two-year cap, savings schemes and AED examples.

Edited by Sumeet YadavFounder & editor, MSMETOOLS · fact-checked against official sources

Updated October 2026 Verified against official sources 12 October 2026 19 min read

UAE gratuity calculation — MSMETOOLS guide cover

Contents (10)

1. Who is entitled to end-of-service gratuity in 2026
2. The UAE gratuity formula, step by step
3. Worked examples in AED
4. Part years, unpaid leave and other service-period questions
5. How resignation, dismissal and contract type affect gratuity
6. The voluntary savings scheme and DEWS
7. Paying gratuity: deadlines, deductions and disputes
8. Common gratuity mistakes and how to fix them
9. Gratuity and other parts of the final settlement
10. What to do next

End-of-service gratuity is usually the biggest single cheque in a UAE final settlement, and it is also the figure most often argued over at MOHRE. This guide is for HR teams, small-business owners and employees in mainland companies and most free zones who want the exact calculation under Federal Decree-Law No. 33 of 2021: what counts as basic wage, how part years and unpaid leave work, where the two-year cap applies, and how the voluntary savings scheme and the DIFC's DEWS plan change the picture. Every step is worked through in AED.

Quick answer

UAE gratuity = daily basic wage (monthly basic ÷ 30) × 21 days' basic wage for each of the first five years + 30 days' basic wage for each later year, with part years paid in proportion once you have one year of continuous service. The total can't exceed two years' wage, and it must be paid within 14 days of the contract ending.

Basic salary only — housing, transport and other allowances are excluded
Example: AED 12,000 basic, 8 years → (5 × 21 + 3 × 30) × AED 400 = AED 78,000
Resigning no longer reduces gratuity — the old one-third/two-thirds cuts were abolished in 2022
Unpaid absence days are taken out of the service period
Emiratis are covered by GPSSA pensions instead of gratuity

Who is entitled to end-of-service gratuity in 2026

Article 51 of Federal Decree-Law No. 33 of 2021, the private-sector labour law in force since 2 February 2022, gives gratuity to every full-time foreign worker who completes at least one year of continuous service. Continuous service means unbroken service with the same employer or its legal successor from the first day of work. If the company is sold or changes legal form, the contracts continue and so does the service clock.

The reason employment ends does not change the formula. Resignation, non-renewal of a fixed-term contract, redundancy, mutual agreement and dismissal all lead to the same calculation. This is the biggest change from the old 1980 law, under which staff on unlimited contracts who resigned early lost a third or two-thirds of their gratuity. Many online calculators still apply those cuts; under the current law they no longer exist.

Two groups sit outside the formula. UAE national workers receive end-of-service benefits under the pensions and social security legislation instead — in practice the General Pension and Social Security Authority (GPSSA) for most emirates and the Abu Dhabi Pension Fund in Abu Dhabi. Employers pay monthly contributions for them (for new GPSSA members, 11% from the employee and 15% from the employer, part of which the government funds for lower salaries) rather than building up a gratuity. Employees in the DIFC and ADGM fall under those financial free zones' own employment laws, covered further down.

Part-time and other non-standard work patterns are handled by the Executive Regulation (Cabinet Resolution No. 1 of 2022), which scales gratuity by the ratio of contracted annual hours to full-time hours. Temporary work patterns and service under one year carry no gratuity.

UAE gratuity at a glance (2026)

21 days' basic wage days

Basic wage per year — years 1 to 5

Art. 51(2)(a)

30 days' basic wage days

Basic wage per year — after year 5

Art. 51(2)(b)

one year

Minimum continuous service

two years' wage

Maximum total gratuity

Art. 51(6)

14 days

Deadline to pay after the contract ends

Art. 53

The UAE gratuity formula, step by step

The law gives the entitlement in days of basic wage, so the first job is to turn a monthly basic salary into a daily rate. The standard convention, used by payroll systems and published UAE gratuity calculators, divides the monthly basic wage by 30, whatever the calendar month. Then:

Find the last basic wage. Article 51(5) uses the last basic wage the worker was entitled to. For piece-rate workers it is the average daily wage over the six months before the claim.
Work out the service period. Count from the first day of work to the last day of the contract, then subtract unpaid absence days (Article 51(4)). Approved unpaid leave and unauthorised absence both come out.
Apply 21 days for each of the first five years. That is 105 days of basic wage for someone with exactly five years.
Apply 30 days for each year after the fifth.
Add part years proportionally. Article 51(3) pays parts of a year in proportion to the time worked, once the first full year is complete. Most employers prorate by months and days; prorating by exact days is the most precise.
Check the cap. The total cannot exceed two years' wage.
Deduct anything legally owed. Article 51(7) lets the employer deduct amounts due under the law or a court judgment — for example an outstanding salary advance or loan you agreed to repay — following the procedures in the Executive Regulation.

What counts as "basic wage" is defined in the law itself: the wage in the employment contract, paid monthly, weekly, daily, hourly or by piece, that does not include allowances or benefits in kind. Housing, transport, telephone, education and utility allowances, commissions and bonuses all sit outside it unless your contract folds them into basic pay.

UAE ten dirham banknote showing a khanjar dagger design — Gratuity is calculated on the basic wage alone, so a contract's basic-to-allowance split decides how many dirhams you receive at the end.· Image: eric2b01.ec (CC BY 2.0)

Worked examples in AED

Example 1 — three years and four months

Anita works in a Dubai trading company on a basic salary of AED 6,000 (total package AED 9,500 with housing and transport). She resigns and her last day is 3 years and 4 months after she joined. She took no unpaid leave.

Daily basic wage: AED 6,000 ÷ 30 = AED 200
Three full years: 3 × 21 × AED 200 = AED 12,600
Part year: 4 ÷ 12 × 21 × AED 200 = AED 1,400
Gratuity: AED 14,000

The AED 3,500 of allowances plays no part. Had her contract put the whole AED 9,500 into basic, her gratuity would have been AED 22,167.

Example 2 — eight years exactly

Mohammed, a site engineer in Abu Dhabi, leaves after exactly 8 years with a last basic wage of AED 12,000.

Daily basic wage: AED 12,000 ÷ 30 = AED 400
First five years: 5 × 21 × AED 400 = AED 42,000
Next three years: 3 × 30 × AED 400 = AED 36,000
Gratuity: AED 78,000

Example 3 — unpaid leave in the middle

Grace has worked 7 years and 6 months on a basic wage of AED 10,000, but took 40 days of approved unpaid leave to care for a parent. Her counted service is roughly 2,738 calendar days less 40, or 2,698 days — about 7.39 years.

Daily basic wage: AED 333.33
First five years: 5 × 21 × AED 333.33 = AED 35,000
Remaining 2.39 years: 2.39 × 30 × AED 333.33 ≈ AED 23,920
Gratuity: about AED 58,920

Without the unpaid leave, she would have received AED 60,000. The difference is small but it is a common source of disputes, so keep written records of any unpaid leave you grant or take.

Example 4 — when the two-year cap bites

Rajesh retires after 28 years with a basic wage of AED 20,000.

Daily basic wage: AED 666.67
Uncapped days: 5 × 21 + 23 × 30 = 105 + 690 = 795 days → AED 530,000
Cap: 24 months × AED 20,000 = AED 480,000
Gratuity paid: AED 480,000

The cap only matters for very long service. Five years at 21 days plus roughly 21 more years at 30 days reaches 730 days, so most employees never hit it.

Basic wage	1 year	3 years	5 years	10 years	15 years
AED 4,000	AED 2,800	AED 8,400	AED 14,000	AED 34,000	AED 54,000
AED 8,000	AED 5,600	AED 16,800	AED 28,000	AED 68,000	AED 108,000
AED 15,000	AED 10,500	AED 31,500	AED 52,500	AED 127,500	AED 202,500
AED 25,000	AED 17,500	AED 52,500	AED 87,500	AED 212,500	AED 337,500

Part years, unpaid leave and other service-period questions

The single biggest cause of wrong gratuity figures is the service period, not the formula. A few rules settle most arguments.

The first year is all-or-nothing. Article 51(3) pays part years only once one year of continuous service is complete. Someone who leaves at 11 months and 29 days receives final wages, unused leave and any notice pay, but no gratuity.

Probation counts. Article 9 says the probation period is counted within the term of service once the worker continues past it, so a six-month probation is part of the gratuity period.

Renewals and extensions don't restart the clock. Article 8 says that when a fixed-term contract is renewed or extended, the new term is added to the original for calculating continuous service. Ending one contract and signing another with the same employer the next day does not reset gratuity. If an employer pays gratuity at each renewal, it should be treated as an advance against the final figure, and the final settlement should show it clearly.

Unpaid absence comes out; paid leave stays in. Annual leave, paid sick leave, maternity leave and public holidays are all service. Unpaid leave and unauthorised absence are excluded. Maternity-related unpaid absence of up to 45 days after maternity leave is specifically excluded from the service term under Article 30.

Moving from an old unlimited contract. Contracts that existed before February 2022 were converted to fixed-term contracts (the deadline was 31 December 2023). Converting the contract with the same employer did not break continuity, so service under the old contract still counts towards the total. If your service spans both laws and an employer argues that older rules apply to the early years, ask MOHRE or a lawyer before you sign a settlement — the amounts at stake can be significant.

Part-time staff. The Executive Regulation scales gratuity by dividing the annual working hours in the part-time contract by the annual hours of a full-time contract. A worker contracted for 50% of full-time hours therefore earns half the full-time gratuity for the same basic wage figure.

What counts towards the gratuity period

Item	Counts as service?	Why
Probation period	Yes	Art. 9(2) — counted once the worker continues
Paid annual and sick leave	Yes	Paid leave is continuous service
Unpaid leave / unauthorised absence	No	Art. 51(4)
Contract renewals with the same employer	Yes	Art. 8(4) — added to the original term
Change of company ownership or legal form	Yes	Art. 48 — contracts continue
Service under 1 year	No gratuity	Art. 51(2)–(3)

Probation period

Counts as service?: Yes
Why: Art. 9(2) — counted once the worker continues

Paid annual and sick leave

Counts as service?: Yes
Why: Paid leave is continuous service

Unpaid leave / unauthorised absence

Counts as service?: No
Why: Art. 51(4)

Contract renewals with the same employer

Counts as service?: Yes
Why: Art. 8(4) — added to the original term

Change of company ownership or legal form

Counts as service?: Yes
Why: Art. 48 — contracts continue

Service under 1 year

Counts as service?: No gratuity
Why: Art. 51(2)–(3)

How resignation, dismissal and contract type affect gratuity

Under the current law gratuity does not depend on who ends the contract. That surprises many employees who remember the old rules, and many employers who still use old templates.

Resignation. You keep the full calculated gratuity if you have more than a year's service. You must still serve the notice period in your contract (between 30 and 90 days), or the employer can claim notice pay equal to your wage for the unserved period — and may set that off against your final dues if the law allows.

Termination by the employer. Full gratuity plus notice pay. If MOHRE or a court finds the termination unlawful under Article 47 (for example, because you filed a genuine complaint), compensation of up to three months' wage is added on top; gratuity is not reduced.

Dismissal without notice for misconduct (Article 44). The law lists the cases — forged documents, gross negligence, disclosing secrets, assault, more than 20 intermittent or 7 consecutive days of unexcused absence and so on. The current law does not forfeit gratuity in these cases. The employer can, however, deduct amounts legally owed, such as the cost of damage that you acknowledged or a court ordered.

Fixed-term contract expiry. The full gratuity is payable when a fixed-term contract simply ends and isn't renewed.

Death. Gratuity forms part of the worker's estate and is paid to the legal heirs together with other dues.

Office towers under construction and completed in Dubai Media City — Most free zones apply the federal gratuity formula; the DIFC and ADGM run their own employment laws.· Image: Lplatebigcheese (CC BY 2.0)

The voluntary savings scheme and DEWS

Article 51(8) lets the Cabinet approve alternatives to the lump-sum gratuity. It did so in Cabinet Resolution No. 96 of 2023, which created an optional alternative end-of-service benefits system — usually called the savings scheme — open to private-sector employers on the mainland and in free zones.

Under the scheme, the employer stops accruing a gratuity for the employees it chooses to enrol and instead pays a monthly contribution into an investment fund licensed by the Securities and Commodities Authority and approved for the scheme. The minimum contributions are 5.83% of the monthly basic wage for employees with under five years' service and 8.33% for those with five years or more. These percentages are simply 21 ÷ 360 and 30 ÷ 360 — the same accrual as the statutory gratuity, but funded every month instead of paid as a lump sum at the end.

Joining is voluntary for the employer, which chooses the categories or skill levels of staff to include; once selected, those employees must take part. The contribution comes on top of salary — it can't be deducted from pay — and the rate depends on total continuous service from the date of employment, not from the date of joining the scheme. Employees can add voluntary contributions of their own of up to 25% of total salary, and unless they choose otherwise the money goes into a capital-guarantee option. The basic contributions can't be withdrawn before employment ends, and they are protected from seizure and from the employer's bankruptcy. The one exception: if employment ends within a year of the start date, the employer may recover what it paid in.

For example, an employer enrolling a sales coordinator with a basic wage of AED 8,000 and two years' service pays AED 466.40 a month (5.83%). From the start of the sixth year the contribution rises to AED 666.40 a month (8.33%). Service before the employee joins the scheme isn't lost: the employer must calculate the gratuity accrued under the Labour Law up to that point, using the basic salary on the date of joining, and pay it when the employment ends. Enrolment procedures are set out in Ministerial Resolution No. 668 of 2023.

DEWS in the DIFC. The Dubai International Financial Centre runs its own employment law. Since 1 February 2020 DIFC employers must fund end-of-service benefits for foreign employees monthly, through the DIFC Employee Workplace Savings plan (DEWS) or another qualifying scheme, at a minimum of 5.83% of basic salary below five years' service and 8.33% from five years. No lump-sum gratuity accrues while those contributions are made. ADGM in Abu Dhabi has its own employment regulations with separate end-of-service rules, so check with the ADGM Registration Authority if you employ staff there.

Statutory gratuity vs savings scheme vs DEWS

	Statutory gratuity (Art. 51)	Savings scheme (CR 96/2023)	DEWS (DIFC)
Who	Mainland and most free zones	Employers who opt in (mainland or free zone)	DIFC employers — mandatory
How it is paid	Lump sum within 14 days of exit	Monthly into a licensed fund	Monthly into DEWS or a qualifying scheme
Rate	21 / 30 days' basic per year	5.83% / 8.33% of basic monthly	5.83% / 8.33% of basic monthly
Investment return	None	Yes, to the employee	Yes, to the employee
Risk if employer fails	Unsecured claim	Money already in the fund	Money already in the fund

Who

Statutory gratuity (Art. 51): Mainland and most free zones
Savings scheme (CR 96/2023): Employers who opt in (mainland or free zone)
DEWS (DIFC): DIFC employers — mandatory

How it is paid

Statutory gratuity (Art. 51): Lump sum within 14 days of exit
Savings scheme (CR 96/2023): Monthly into a licensed fund
DEWS (DIFC): Monthly into DEWS or a qualifying scheme

Rate

Statutory gratuity (Art. 51): 21 / 30 days' basic per year
Savings scheme (CR 96/2023): 5.83% / 8.33% of basic monthly
DEWS (DIFC): 5.83% / 8.33% of basic monthly

Investment return

Statutory gratuity (Art. 51): None
Savings scheme (CR 96/2023): Yes, to the employee
DEWS (DIFC): Yes, to the employee

Risk if employer fails

Statutory gratuity (Art. 51): Unsecured claim
Savings scheme (CR 96/2023): Money already in the fund
DEWS (DIFC): Money already in the fund

Paying gratuity: deadlines, deductions and disputes

Article 53 requires the employer to pay wages and all other entitlements — gratuity, unused leave, notice pay and any contractual dues — within 14 days of the end of the contract. Most employers pay through the same bank channel as monthly salaries, and settlement through the Wage Protection System keeps an auditable record.

A clean final settlement statement lists the start date, end date, unpaid days removed, last basic wage, daily rate, days of gratuity for each band, any part-year amount, each deduction with its legal basis, and the net figure. Employees should check every line before signing a clearance, and raise any disagreement in writing before signing rather than after.

If the money doesn't arrive, file a complaint with MOHRE through its website, app or a Tas-heel or Tawjeeh centre. Since Decree-Law No. 20 of 2023, MOHRE itself decides claims worth up to AED 50,000 (or of any value where a party ignores an amicable settlement), and its decision is enforceable. Since Decree-Law No. 9 of 2024, which took effect on 30 August 2024, a party can challenge a MOHRE decision in court within 15 working days, and labour claims must be filed within two years of the end of employment. Labour claims up to AED 100,000 filed by workers are exempt from court fees.

How to calculate and settle a gratuity

1
Confirm eligibility
Check the worker is foreign, on a full-time (or part-time) contract and has at least one year of continuous service.
2
Pull the last basic wage
Use the basic wage in the MOHRE contract and the latest amendment — not the total package.
3
Count service days
First day of work to last day of contract, minus unpaid leave and unauthorised absence.
4
Apply 21 then 30 days
Daily rate = basic ÷ 30. Multiply by 21 for years 1–5 and 30 for later years; prorate the part year.
5
Cap, deduct and document
Limit to two years' wage, deduct only amounts legally owed, and issue a line-by-line settlement.
6
Pay within 14 days
Pay within 14 days of the contract end, together with final wages and unused leave.

Common gratuity mistakes and how to fix them

Applying the old resignation reductions. Pre-2022 calculators cut gratuity to one-third (one to three years) or two-thirds (three to five years) when an employee on an unlimited contract resigned. The current law has no such reduction. If your settlement shows one, ask HR to recalculate under Article 51.

Using total salary. Gratuity uses basic wage only. Employees sometimes over-claim by using the full package; employers sometimes under-pay by using an old basic figure from before a raise. Use the last basic wage in force.

Dividing by 365 or by 26. The daily rate is monthly basic ÷ 30 in UAE practice. Dividing annual basic by 365 gives a slightly lower figure; dividing by 26 (the Indian convention) gives a much higher one.

Restarting service at renewal. Paying gratuity at each renewal and then starting from zero is a frequent cause of claims, especially when the payment wasn't clearly labelled. The law adds renewed terms to the original service.

Treating 21 days as applying to all years. After five years, every additional year earns 30 days, not 21. On a AED 15,000 basic, getting this wrong for years six to ten under-pays AED 22,500.

Forgetting part years. Someone leaving at 6 years and 10 months is due 0.83 of a year at the 30-day rate, not just six full years.

Missing the 14-day deadline. Late payment is a breach of the law and can trigger a MOHRE complaint, a block on new work permits and fines. Budget for gratuity as a liability every month — many SMEs accrue 5.83% or 8.33% of basic in their accounts even if they don't join the savings scheme, which also makes the year-end provision for UAE corporate tax easier to support.

Gratuity and other parts of the final settlement

Gratuity is only one line of the final settlement. A complete settlement also includes salary to the last working day, payment for unused annual leave calculated on basic wage (Article 29), notice pay if notice wasn't served, any overtime or commission still owed, and a repatriation ticket where the employer is responsible for it. The employer must also cancel the work permit and residence visa through MOHRE and the immigration authority.

If you are setting up payroll for a new company, write the basic-wage split into your UAE employment contracts deliberately and make sure salaries flow through the Wage Protection System. Companies with 50 or more staff also need to plan for Emiratisation targets, where Emirati staff are covered by GPSSA pension contributions rather than gratuity.

Final settlement checklist

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Create a clear final pay slipFree, no login — itemise the gratuity, unused leave and deductions on one slip.

Official links

What to do next

Pull the latest contract for each employee, confirm the basic wage, and set up a monthly gratuity accrual (5.83% of basic for staff under five years, 8.33% after) so the liability never surprises you. Then decide whether the voluntary savings scheme suits your business: it turns an unfunded lump sum into a predictable monthly cost and gives staff investment growth. If you are an employee, run the numbers in the table above against your settlement and raise any gap with HR before you sign the clearance.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Take the last monthly basic wage and divide by 30 to get a daily rate. Multiply it by 21 days' basic wage for each of the first five years and by 30 days' basic wage for each year after that, add a proportional amount for any part year, and cap the total at two years' wage. Allowances such as housing and transport are excluded, and unpaid absence days are not counted as service.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 12 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1.Federal Decree-Law No. 33 of 2021 Regarding the Regulation of Employment Relationships and its amendments (consolidated English text) — Ministry of Human Resources and Emiratisation (archived copy) · accessed 12 October 2026
2.Cabinet Resolution No. 96 of 2023 regarding an alternative end-of-service benefits system — Ministry of Human Resources and Emiratisation (archived copy) · accessed 12 October 2026
3.Federal Decree-Law No. 33 of 2021 (English translation, original text) — FAO FAOLEX database · accessed 12 October 2026
4.UAE introduces voluntary alternative end-of-service benefits scheme — EY · accessed 12 October 2026
5.Significant amendments to the UAE Labour Law: Articles 54 and 60 — Clyde & Co · accessed 12 October 2026
6.DIFC unveils new progressive employee workplace savings plan — Government of Dubai Media Office · accessed 12 October 2026
7.GPSSA and ADPF pension contributions for UAE national employees — Zoho Payroll Academy · accessed 12 October 2026
8.UAE gratuity calculator: what are your end-of-service benefits? — Gulf News · accessed 12 October 2026

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