How UAE gratuity is calculated in 2026
The rule sits in Article 51 of Federal Decree-Law 33 of 2021, the federal labour law that MOHRE administers, and it is summarised in plain language on u.ae. It applies to onshore private sector contracts in Dubai, Abu Dhabi, Sharjah and every other emirate. Only the DIFC and ADGM financial free zones run their own regimes, covered further down.
- Take the last monthly basic wage and divide it by 30 to get a daily wage. The law and u.ae state days of basic wage rather than a divisor; the 30 day month is the convention advisers and calculators use.
- Years 1 to 5: 21 days of basic wage for each year, which is 0.7 of a month's basic wage per year.
- Year 6 onward: 30 days of basic wage for each year, which is one month's basic wage per year.
- A part year is paid at that year's rate in proportion to the time served, once the first full year is complete.
- Add the bands together and check the total against the cap of two years' wage.
The same formula applies whoever ends the contract and however the contract was originally labelled. Since 2 February 2022 the law only permits fixed term contracts, and Article 68 of the decree gave employers one year, to 2 February 2023, to convert existing unlimited contracts, a period the Minister could extend. The old limited versus unlimited distinction therefore has no effect on the amount.
What counts as basic wage
Only the basic wage counts. u.ae puts it directly: the gratuity is calculated on the basis of the last wage the worker was entitled to, namely the basic salary, and it does not include allowances such as housing, transportation, utilities or furniture. If a contract shows one total figure, the payslip or the MOHRE contract will show the basic wage separately; that is the number to enter above. Article 1 of the decree defines the basic wage as the wage stipulated in the contract for the work itself, on a monthly, weekly, daily, hourly or piecework basis, excluding any other allowances or benefits in kind. Workers paid by the piece are assessed on an average daily wage under Article 51 rather than a monthly basic figure, so this tool does not fit them.
Service under one year, fractions of a year and unpaid absence
Nothing is due until the employee has completed one year of continuous service. After that, u.ae confirms that workers are entitled to gratuity for fractions of a year, proportionate to the time served, and that days of unpaid absence are not included in service calculations.
The calculator counts whole years from the start date to each anniversary, then whole months, then leftover days. The year in progress is valued as months divided by 12 plus days divided by 365, at 21 or 30 days depending on whether five full years are already done. Unpaid absence days move the end of service back by the same number of days, so they can also delay the one year threshold.
The two year cap
u.ae states that in all cases the total gratuity shall not exceed the wage of two years. Article 51 of the decree says the benefit in its entirety cannot exceed two years' wage, and Article 1 defines wage as the basic wage plus cash allowances and benefits in kind. The calculator applies the cap as 24 times the monthly basic wage, the stricter reading, so on very long service the statutory ceiling can be higher than the figure shown. Under the 21 and 30 day schedule the gross figure only reaches 24 months of basic wage after about 25 and a half years of service (105 days for the first five years plus 30 days for each later year reaches 720 days at that point), so most estimates sit well below it.
Resignation and termination pay the same since February 2022
Federal Decree-Law 33 of 2021 replaced the 1980 labour law on 2 February 2022. Morgan Lewis notes that the new decree no longer has a reduction for resignation and that an employer dismissing for cause is no longer entitled to withhold the end of service gratuity. The one third and two thirds reductions that some older calculators still show belong to the repealed law and should not be applied to a contract ending today.
When gratuity must be paid
Employers must pay all outstanding wages, other entitlements and gratuity within 14 days of the termination of the contract. The same page confirms the employer may deduct any amounts the worker owes from the gratuity, so the amount that lands in the account can be lower than the statutory figure if a loan or an advance is still open.
Who is not on this formula: Emiratis, DIFC and ADGM staff
UAE nationals. Emiratis in the private sector are covered by the pension and social security legislation administered by GPSSA rather than the 21 and 30 day formula; Article 51 itself sends them to the pension legislation. For Emiratis who join the labour market for the first time on or after 31 October 2023, under Federal Decree-Law 57 of 2023, private sector contributions are 11% from the employee and 15% from the employer, with 2.5% government support for pensionable salaries under AED 20,000; earlier joiners stay on Federal Law 7 of 1999. The calculator shows a note rather than a figure for them.
DIFC. DIFC contracts have not accrued gratuity since 1 February 2020. From that date employers pay monthly into a qualifying workplace savings plan such as DEWS at a minimum of 5.83% of basic salary for staff with under five years' service and 8.33% from five years. The plan balance is what the employee receives for service since then; gratuity accrued before that date stays with the employer unless it was transferred into the plan by agreement.
ADGM. The ADGM Employment Regulations 2024, in force from 1 April 2025, keep 21 and 30 days of basic wage per year after one year of service, but the daily rate is annual basic wage divided by 365, basic wage must be at least 50% of total wages, UAE and GCC nationals on the federal pension are excluded, and the two year cap was removed. Treat an ADGM contract separately.
Optional savings scheme. u.ae also describes an alternative end of service benefits system under Cabinet Resolution 96 of 2023, open to private sector and free zone employers on a voluntary basis. The employer pays 5.83% of the monthly basic salary for an employee with under five years' service, or 8.33% after five years, into an approved fund instead of accruing gratuity, and the employee receives the contributions plus any returns within 14 days of leaving. Domestic workers are on a separate law and are outside this tool as well.
Worked example
Basic wage AED 10,000, service of 7 years and 3 months, no unpaid absence. Press "Load the worked example" in the calculator to see the same lines live.
| Line | Working | AED |
|---|---|---|
| Daily basic wage | 10,000 / 30 | 333.33 |
| Years 1 to 5 | 5 x 21 = 105 days x 333.33 | 35,000.00 |
| Years 6 and 7 | 2 x 30 = 60 days x 333.33 | 20,000.00 |
| 3 months of year 8 | 30 x 3/12 = 7.5 days x 333.33 | 2,500.00 |
| Cap check | 24 x 10,000 = 240,000, not reached | |
| Gratuity | 172.5 days x 333.33 | 57,500.00 |
Assumptions and exclusions
- Onshore private sector contract under Federal Decree-Law 33 of 2021. DIFC, ADGM, UAE nationals, domestic workers and employees on the optional savings scheme are outside the formula.
- The wage entered is the last monthly basic wage. Allowances, commission and bonuses are excluded.
- Daily wage is the monthly basic wage divided by 30, a convention rather than a figure quoted in the law.
- Whole years run from the start date to each anniversary. The year in progress is valued as months divided by 12 plus days divided by 365.
- Unpaid absence days are removed by moving the end of service back. The tool does not model periods of suspension, secondment or breaks in continuity.
- The cap is applied as 24 times the monthly basic wage. The law measures it against two years' wage, which includes allowances, so this is the stricter reading.
- Workers paid by the piece, whose benefit is based on an average daily wage, are outside the tool.
- Deductions for amounts owed to the employer, contractual top ups and settlement agreements are not included.
How Axion People accrues gratuity every month
In Axion, the People box calculates end of service gratuity from the employee record: start date, current basic wage and unpaid leave feed the accrual, so the liability is visible every month rather than discovered at the final settlement. It sits alongside payroll runs, WPS files and GOSI in the same box, with Arabic and English throughout. Axion reports the accrual and the settlement figure; it does not pay gratuity or file anything with MOHRE.
Frequently asked questions
How is gratuity calculated in the UAE?
For an onshore private sector employee with at least one year of continuous service, gratuity is 21 days of basic wage for each of the first five years and 30 days of basic wage for each year after that, calculated on the last basic wage. Part years are paid pro rata once the first year is complete, unpaid absence days are removed from service, and the total cannot exceed two years' wage. In practice the daily wage is the monthly basic wage divided by 30.
Is gratuity calculated on basic salary or total salary?
On the basic salary only. u.ae states that gratuity is calculated on the last wage the worker was entitled to, namely the basic salary, and does not include allowances such as housing, transport, utilities or furniture.
Do I get full gratuity if I resign in the UAE?
Yes. Federal Decree-Law 33 of 2021, in force since 2 February 2022, has no reduction for resignation. Resignation and termination attract the same gratuity, and an employer can no longer withhold gratuity on dismissal for cause. The old one third and two thirds reductions belonged to the 1980 law and no longer apply.
Is gratuity different for limited and unlimited contracts?
No. Since 2 February 2022 the law only permits fixed term contracts, and Article 68 of Federal Decree-Law 33 of 2021 gave employers a year, to 2 February 2023, to convert existing unlimited contracts, a period the Minister could extend. Every onshore contract is on the same 21 and 30 day schedule regardless of how it was originally written or who ends it.
Is there a maximum gratuity in the UAE?
Yes. Article 51 states that the end of service benefit in its entirety cannot exceed two years' wage, and Article 1 defines wage as the basic wage plus cash allowances and benefits in kind. This calculator applies the cap as 24 times the monthly basic wage, the stricter reading, so on very long service the statutory ceiling can be higher than the figure shown. Under the 21 and 30 day schedule the basic wage cap is only reached after roughly 25 and a half years of service.
When does the employer have to pay gratuity?
Within 14 days of the end of the contract. u.ae states that employers must pay all outstanding wages, other entitlements and gratuity within 14 days of the termination of the contract, and that they may deduct any amounts the worker owes from the gratuity.
Related tools and guides
- End of service gratuity across the GCC in 2026, the guide behind this calculator, with the rules for all six states.
- Saudi end of service calculator, for the half month and full month award under the Saudi Labor Law.
- GOSI calculator, for Saudi social insurance contributions.
- GCC payroll compliance in 2026: WPS, GOSI and gratuity.
- All Axion tools and the Axion FAQ.
Sources
All sources checked on 4 September 2026.
- u.ae, End of service benefits for workers in the private sector (Article 51 of Federal Decree-Law 33 of 2021 and the Cabinet Resolution 96 of 2023 savings scheme)
- MOHRE, Federal Decree-Law No. 33 of 2021 regarding the regulation of employment relationships and its amendments (PDF): Articles 1, 51, 53 and 68
- Morgan Lewis, United Arab Emirates updates federal labour law (December 2021): effective date, fixed term contracts, resignation reduction removed
- UAE Labour Law guide, UAE gratuity calculation 2026: the 30 day month convention for the daily wage
- u.ae, Pensions and social security for UAE citizens (GPSSA contribution rates)
- Zurich Workplace Solutions, DEWS employer page (DIFC contribution rates)
- ADGM Employment Affairs Office, FAQs on the Employment Regulations 2024 (February 2025)
- Mondaq, Key provisions of the newly issued ADGM Employment Regulations 2024 (two year cap removed, in force 1 April 2025)
This calculator gives an estimate based on the onshore federal rules and the 30 day month convention. It is not legal advice and it is not a government or MOHRE tool. Employment contracts, company policies and settlement agreements can add to the statutory minimum, and MOHRE and the courts decide disputes. Check the final figure with your employer or a qualified adviser before relying on it.