Calculate end-of-service gratuity under Federal Decree-Law No. 33 of 2021 (current UAE Labour Law). Instant, accurate, free.
The UAE end-of-service gratuity is governed by Federal Decree-Law No. 33 of 2021, which came into effect on 2 February 2022. It replaced the old Labour Law (Federal Law No. 8 of 1980) and simplified gratuity rules significantly.
Any employee in the UAE private sector who has completed at least 1 year of continuous service is entitled to gratuity on leaving, regardless of whether they resign or are terminated.
| Years of service | Days of basic per year | Formula |
|---|---|---|
| Less than 1 year | 0 | No gratuity |
| 1 to 5 years | 21 calendar days | (Basic ÷ 30) × 21 × years |
| More than 5 years | 30 calendar days (for years beyond 5) | (Basic ÷ 30) × [(21 × 5) + 30 × (years − 5)] |
Maximum cap: Gratuity cannot exceed 2 years' basic salary (24 months), regardless of total years served.
Gratuity is calculated on basic salary only. Housing allowance, transport allowance, commissions, bonuses, overtime pay, or any other benefits are not included.
If your employee was on an old unlimited contract before February 2022 and resigned, the entitlement is reduced:
| Service length on resignation | Gratuity entitlement |
|---|---|
| 1 to 3 years | One-third (1/3) of full gratuity |
| 3 to 5 years | Two-thirds (2/3) of full gratuity |
| More than 5 years | Full gratuity |
If the employer terminates an unlimited contract, full gratuity is always owed regardless of years served.
Under the 2022 reform, all employment contracts must be limited (fixed-term, renewable). Employees on these contracts receive full gratuity whether they resign or are terminated. No reduction applies.
Yes. The total gratuity cannot exceed 2 years' basic salary (equivalent to 24 months of basic pay), no matter how many years the employee has worked.
No. Only basic salary is used in the gratuity calculation. Housing, transport, food, and other allowances are excluded, even if they form a large part of the total package.
If an employee is terminated or leaves during probation (maximum 6 months under the 2022 law), no gratuity is payable since the 1-year minimum has not been reached.
No. There is no personal income tax in the UAE, so gratuity is received in full by the employee.
An employer can only deduct from gratuity if a court order permits it, for example to recover a proven debt owed by the employee. Employers cannot unilaterally reduce gratuity.
Gratuity is a separate obligation from WPS (Wage Protection System). WPS covers monthly salaries; gratuity is a one-time end-of-service payment. However, consistent WPS compliance helps avoid disputes when calculating the "last basic salary" used in gratuity.
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