October 20, 2026
Enter your last basic salary and your dates. You get your estimated end-of-service gratuity under UAE Federal Decree-Law No. 33 of 2021, with every step shown.
Quick answer: UAE end of service gratuity is worked out on your last basic salary, not your full package. Under Federal Decree-Law No. 33 of 2021, a full-time employee who completes a year of continuous service is owed 21 days’ basic pay a year through year five, then 30 days a year from year six. Part years count pro rata, and the overall payout tops out at two years’ wage. Turn basic salary into a daily rate (basic divided by 30 is the common method), multiply by the days earned, and expect payment within 14 days of the contract ending.
Saturday evening, a café on a side street in Karama. A mechanical engineer has just handed in his notice after six years and four months with a contracting firm. His chai is going cold. He has a pen, a paper napkin and a phone calculator.
First attempt: he takes his monthly salary of AED 18,000, divides by 30, multiplies by the days he thinks he has earned. AED 87,000. That feels generous.
Second attempt: he remembers gratuity is “21 days a year” and applies it to everything. AED 55,860.
Third attempt: he drops the four extra months because “they probably don’t count”. AED 56,700.
Three numbers, a gap of more than AED 30,000 between the highest and the lowest, and not one of them is right. The correct figure, as Example 2 shows, is AED 60,900.
The calculator above gives a fast estimate from your basic salary and dates. This guide shows the working behind it: the rules, the formula, three fully worked examples and the details that move the result, so you can check any UAE gratuity calculator 2026 figure, your employer’s included.
End-of-service gratuity is a lump sum the law requires employers to pay eligible employees when they leave. In the UAE it rests on two numbers: final basic salary and qualifying years.
The rate is not flat. Someone with six qualifying years gets five years at 21 days of basic salary and one further year at 30 days. The higher rate only applies once you are past the fifth year. That single detail explains a lot of wrong napkins.
Gratuity is also only one line of the final settlement. Salary owed, unused leave and notice pay are worked out separately, so an estimate gives you one important number, not the whole cheque.
Every UAE labour law gratuity calculation starts with one question: which law covers you? (Many people search for a UAE labor law gratuity calculation, with the American spelling. Same question.) The answer depends on where your employer is registered and what kind of worker you are.
For most private-sector jobs, the governing law is Federal Decree-Law No. 33 of 2021, the UAE’s labour relations statute, with its executive regulations. If you used a UAE gratuity calculator 2025 version last year, nothing in the formula has moved for 2026, because the rules come from this law, which has applied since February 2022.
“Working in Dubai” does not mean everyone follows identical rules.
| Where you work | What governs your end-of-service benefit |
|---|---|
| Mainland private sector | Federal labour law and its executive regulations |
| Most free zones | The federal framework, plus the free zone’s own procedures |
| DIFC | DIFC Employment Law; gratuity was replaced by the DEWS savings scheme |
| ADGM | ADGM employment regulations |
| Government | The relevant public-sector legislation |
| UAE nationals | Pension and social security rules, including GPSSA |
| Voluntary savings scheme members | The scheme’s rules and accrued balance |
The calculator above, like every general tool, is built for the first two rows. If you sit in another row, treat its result as a rough guide and confirm your figure with your employer or the relevant authority.
Under the federal rules for full-time private-sector employees, five checks decide whether gratuity is due.
You need at least one year of continuous service. Leave at eleven months and traditional gratuity is not payable. Once you pass the one-year mark, a qualifying part of a further year counts as well.
The standard formula is built around full-time staff. The current law also recognises part-time, temporary and flexible work, and those arrangements can carry end-of-service benefits calculated differently under the executive regulations and the contract.
Resigning does not, on its own, cancel or shrink the gratuity of an eligible employee under the current federal law. That surprises people who remember the old rules. Notice, outstanding dues and any lawful deductions are still reviewed separately.
Service follows the legal definition, not just the dates on your visa. Unpaid absence comes out of it. Check your official joining date, your last working day and any unpaid periods on record.
Some employers have joined the UAE’s voluntary alternative end-of-service savings scheme. If you are covered by it, your benefit is worked out differently. Section 8 explains how.
Here is the gratuity calculation formula in UAE terms, in six steps. One salary runs through all of them: a basic of AED 12,600 a month, plus housing of AED 4,200 and transport of AED 1,200, for a package of AED 18,000.
Use the basic salary on your contract and final payslip. Here that is AED 12,600, not AED 18,000. Allowances stay out. If the structure is unclear, read the signed contract before calculating anything.
The convention used in this guide, and the most common one in UAE practice, divides basic salary by 30.
Daily basic salary = monthly basic ÷ 30
AED 12,600 ÷ 30 = AED 420 a day.
Some employers use basic × 12 ÷ 365 instead, which gives a slightly lower rate (about AED 414.25 here). Employers should confirm which basis their own contracts and payroll use, and stick to it for every leaver.
Each of those years earns 21 days. Five full years: 21 × 5 = 105 days.
Each later year earns 30 days. For part years, this guide prorates by complete months, with each month worth one twelfth of a year’s days. Four extra months in the 30-day band add 30 × 4 ÷ 12 = 10 days.
Gratuity = daily basic salary × total days earned
With exactly six years: (105 + 30) × AED 420 = 135 × 420 = AED 56,700.
The law caps gratuity at two years’ wage. On a basic of AED 12,600, that ceiling is 24 × 12,600 = AED 302,400.
In practice it only bites after very long service. Years one to five earn 105 days, three and a half months of basic. Every later year earns one month. You reach 24 months only after about 25 and a half years with one employer. A sound gratuity calculator in the UAE applies the ceiling last, after the underlying entitlement is worked out.
The three examples below follow section 4: basic divided by 30 for the daily rate, part years prorated by complete months, continuous full-time service under the federal law and no special scheme. They are illustrations, not legal determinations.
A sales coordinator at a trading company in Deira joined on 1 September 2022 and leaves on 31 August 2026. That is exactly four years, with no unpaid leave. Her basic salary is AED 7,200 and her package with allowances is AED 10,200.
Sense check: 84 days is 2.8 months of basic, and 2.8 × 7,200 is also AED 20,160. Typing in her AED 10,200 package would have promised AED 28,560 instead.
The engineer joined on 1 May 2020 and his last day is 31 August 2026: six years and four months of continuous service. Basic AED 12,600, package AED 18,000.
Now his napkin makes sense. AED 87,000 used the full package (145 days × AED 600). AED 55,860 applied 21 days to all six years and four months (133 days × AED 420). AED 56,700 ignored the four months (135 days × AED 420). If his employer uses the 365-day convention, the daily rate is about AED 414.25 and the result about AED 60,066.
A lab technician at a clinic in Mirdif joined on 1 March 2022 and leaves on 31 August 2026. On the calendar that is four years and six months. In 2024 she took 30 days of approved unpaid leave, which this example treats as one month off her service. Her basic is AED 9,600.
Leave the unpaid month in and the figure becomes 94.5 × 320 = AED 30,240. The AED 560 gap is small, but it is exactly the kind of gap that turns a friendly exit into a dispute. Counting the unpaid period in days rather than as a month would shift the answer by a few dirhams, which is why the employer’s method should be written down.
Shorter cases using the same method, with complete years unless shown and continuous service.
| Basic salary | Service | Days earned | Gratuity |
|---|---|---|---|
| AED 5,000 | 1 year | 21 | AED 3,500 |
| AED 8,000 | 3 years | 63 | AED 16,800 |
| AED 9,000 | 4 years 6 months | 94.5 | AED 28,350 |
| AED 10,000 | 5 years | 105 | AED 35,000 |
| AED 10,000 | 6 years | 135 | AED 45,000 |
| AED 12,000 | 10 years | 255 | AED 102,000 |
| AED 15,000 | 15 years | 405 | AED 202,500 (ceiling AED 360,000) |
| AED 10,000 | 27 years | 765 | AED 255,000, capped at AED 240,000 |
Only the last row is changed by the ceiling.
Three questions move the number more than any others.
Few people leave on their work anniversary. Once the first full year is done, a fraction of a further year is paid in proportion, at the rate for that year: 21 days within the first five, 30 days after.
The catch is the method. Prorating by complete months, as our examples do, is simple and transparent. Prorating by days is more precise. Both are reasonable, as long as the employer picks one and applies it consistently. Ask which one applies to you.
Not any more, for an otherwise eligible employee under the current federal law. Older articles still describe cuts of a third or two thirds for early resignations. Those come from the previous labour law and have no place in a 2026 calculation.
Take someone with seven years of service who resigns to join a competitor. Their gratuity is five years at 21 days plus two years at 30 days: 165 days of basic. Notice must still be served or settled as the contract says.
Yes. Unpaid absence is excluded from the service used for gratuity, as Example 3 shows, so calendar time and qualifying service can differ. Paid annual leave, paid sick leave and other authorised paid leave are a different matter. If a settlement removes paid leave from your service, ask why.
Salary structure causes more disputes than the formula. A typical UAE package includes basic salary, housing, transport, sometimes a telephone allowance, and other contractual benefits.
For traditional gratuity, only the basic salary goes into the computation of gratuity in UAE private-sector jobs. Allowances are not added automatically.
The difference is large. Take AED 8,000 basic, AED 2,000 housing and AED 1,000 transport: AED 11,000 in all. Using AED 11,000 instead of AED 8,000 overstates the result by 37.5%. Over five years, that is AED 38,500 against the correct AED 28,000.
This is also why some employers keep basic low and allowances high. It is lawful, but it lowers gratuity, so read your contract and payslips. Your salary certificate should show the same basic figure as both.
The UAE has introduced a voluntary alternative to traditional gratuity. Participating employers pay contributions into approved investment funds for covered employees. Instead of a lump sum worked out at exit, the employee receives those contributions and any returns, under the scheme’s rules.
Not every employer has joined, so ask HR rather than assume. If you are enrolled, a standard calculator, including the one above, will not give the right answer. Your benefit can depend on:
Returns are not guaranteed unless the scheme terms say so. Ask for a statement of your balance. DIFC staff are separate again: their benefit sits in a DEWS account, not a gratuity formula.
Under the federal rules, wages and other entitlements, gratuity included, are due within 14 days of the contract ending.
A complete final settlement usually lists:
Ask for the breakdown in writing and keep it with your contract, payslips and leave records. If you disagree on eligibility, the salary used or the amount, raise it with the employer first and then, if needed, with MOHRE or a legal adviser.
A gratuity calculator in the UAE is only as good as its inputs. These errors produced the engineer’s napkin, and a few more.
A calculation you can trace is far easier to agree on than a total with no workings.
Gratuity looks like an exit problem. It is a monthly cost that you settle later.
Start with the salary package, then add what never appears on the payslip. Gratuity is the line most often missing from budgets.
For the engineer in Example 2, on a basic of AED 12,600:
On his AED 18,000 package, the early accrual adds a little over 4% to the monthly cost. Every raise also re-prices the whole balance, because gratuity follows the last basic salary.
The rest of the bill typically covers the visa and work permit, health insurance (compulsory in Dubai and Abu Dhabi), annual leave and any cover it needs, and contractual extras such as flights. Emirati staff also carry GPSSA pension contributions. Salaries attract no personal income tax in the UAE, so there is no payroll tax line.
Most settlement disputes start with records, not law.
A reliable calculator, whether a web tool or your payroll system, should keep the five-year bands apart, handle part years, apply the ceiling automatically, state the legal framework it assumes and warn when special arrangements may apply.
The wider legal picture behind settlements, from contracts to leave, is set out in our guide to UAE labour law 2026 under Federal Decree-Law No. 33. How payroll systems keep gratuity provisions current month by month is covered in our main guide to cloud payroll software for Dubai.
Our own platform, Workplus HCM, was built in Dubai to run HR and payroll under UAE and GCC rules. Gratuity is calculated to the federal labour law straight from each person’s employee file, so accruals follow every change in basic salary, and unpaid leave approved in the leave module reduces service without anyone retyping it. When someone resigns, the settlement draws on the same data that runs monthly payroll and the WPS file.
To see exits and accruals in action, visit the payroll software in Dubai page. Payroll belongs to the Power plan, AED 16 per employee per month, and our pricing page lays the three plans side by side.
The engineer in Karama threw the napkin away. With his AED 12,600 basic, 105 days for the first five years and 40 days for the year and four months after, he reached AED 60,900. When his employer’s settlement arrived, the gratuity line read AED 60,066, which is AED 834 less than his figure. This time he knew why: they divide by 365, not 30.
That is the value of understanding your end of service gratuity rather than just reading a total. Use basic salary, split the years at five, count part years, take out unpaid leave and check the ceiling. The calculator above then becomes something you can verify, not something you hope is right.
Employers who want gratuity, leave and final settlements calculated from one record can request a 30-minute Workplus HCM walkthrough at no cost.
Last reviewed: 26 October 2026. Gratuity conventions, such as the daily-rate basis, can differ by contract. The calculator and examples here are a guide, not legal advice, so confirm a final settlement figure with MOHRE or a qualified legal adviser before you pay it.
An eligible full-time employee earns 21 days of basic salary for one full year. On a basic of AED 6,000, that is 6,000 ÷ 30 × 21 = AED 4,200. Leave a day before the first anniversary and no traditional gratuity is due.
The opening five years are worth 21 days of basic salary apiece, and each later year is worth 30. Seven years therefore gives 105 + 60 = 165 days of basic. Part years after the fifth are prorated at the 30-day rate.
On basic salary. Housing, transport and other allowances are not added under the standard formula, so take the basic figure from your contract and payslips.
Yes, if you are otherwise eligible. Under the current federal law, resigning does not cancel or reduce gratuity, unlike under the old law. You still need to serve or settle your notice.
Two years’ wage. On a basic of AED 10,000 the ceiling is AED 240,000. Because of how the bands work, most people only reach it after more than 25 years with one employer.
No traditional gratuity is due under the standard federal rule until a full year of continuous service is complete. Salary owed and any leave entitlement are still payable.
They can be. The current law recognises part-time work and its end-of-service benefits, but the method can differ from the full-time formula under the executive regulations and the contract. Check the terms for your role.
Yes. Unpaid absence is removed from qualifying service, which lowers the days earned. In Example 3, one unpaid month cost AED 560. Paid leave should not be removed.
Within 14 days of the contract ending, under the federal private-sector rules. It should cover gratuity, salary owed, unused leave at the basic rate and any other dues, set out in writing.
No. Mainland and most free zone private-sector staff follow the federal formula. DIFC uses DEWS, ADGM has its own regulations, government employees and UAE nationals have separate systems, and savings-scheme members follow its rules.
It gives a reliable estimate, not a binding figure. The final amount depends on the governing law, verified dates, the correct basic salary, unpaid leave and the employer’s method. Use the estimate to check the settlement, then raise any gap with HR.
No. It pays out your employer’s contributions and any investment returns under its own rules, not a days-of-basic formula. If you are enrolled, ask for your scheme statement.
Add the salary package, gratuity accrual, visa and permit costs, health insurance where compulsory, leave cost and any contractual extras. Gratuity alone runs at 21 days of basic a year for the first five years, about 5.8% of basic, then 30 days a year. On a basic of AED 12,600, that is AED 735 a month at first and AED 1,050 later.
