UAE Gratuity Calculator (End of Service)

What the 2022 Labour Law Changed

The UAE's Federal Decree-Law No. 33 of 2021, effective from February 2022, replaced the old limited/unlimited contract split with a single unified system. The biggest practical change for employees is that resignation no longer reduces your end-of-service gratuity. Under the previous rules, an employee who resigned before completing five years lost a chunk of their benefit. That penalty is gone — today the same 21-day and 30-day calculation applies whether you resign or your employer terminates you.

The 21-Day and 30-Day Tiers

Your gratuity is built from two tiers, both calculated on your daily wage, which is your monthly basic salary divided by 30:

• First 5 years: 21 days of basic pay for each year of service.
• Beyond 5 years: 30 days of basic pay for each additional year.

Crucially, only basic salary feeds the formula. Housing, transport, and other allowances are excluded. The full entitlement is then capped at 24 months (2 years) of basic salary, and you need at least one full year of service before any gratuity is payable.

The Formula

Gratuity = (21 × daily wage × min(years, 5)) + (30 × daily wage × max(0, years − 5))

…then capped at 24 × monthly basic salary. Length of service is fractional, so seven years and six months counts as 7.5 years, not 7.

A Worked Example in AED

Take Khalid, who earns a monthly basic salary of AED 10,000 and has worked 8 years and 6 months (8.5 years) before leaving.

1. Daily wage = 10,000 ÷ 30 = AED 333.33.
2. First-5-years tier = 21 × 333.33 × 5 = AED 35,000.
3. Beyond-5-years tier = 30 × 333.33 × (8.5 − 5) = 30 × 333.33 × 3.5 = AED 35,000.
4. Raw gratuity = 35,000 + 35,000 = AED 70,000.
5. Cap check: 24 × 10,000 = AED 240,000. The raw amount is well under the ceiling, so the cap does not apply.

Khalid's end-of-service gratuity is AED 70,000. Note that because resignation no longer reduces the benefit, he receives this full amount even if he resigned voluntarily.

When the 2-Year Cap Bites

The cap only matters for very long tenures or high basic salaries. With a basic of AED 10,000, the ceiling is AED 240,000 — equivalent to roughly 24 years of the 30-day tier. Most employees never reach it, but senior staff with decades of service can, in which case the payout stops at 24 months of basic pay regardless of the raw calculation. The calculator shows both the raw entitlement and the capped figure so you can see exactly when and how the ceiling applies.

Plan Around Basic Salary

Because gratuity rides entirely on basic pay, two colleagues on the same total package can receive very different end-of-service amounts if their allowance splits differ. If you are negotiating an offer, a higher basic salary lifts your eventual gratuity. Pair this tool with our general gratuity calculator to compare the UAE method against the 15/26 formula used elsewhere, or model your monthly cash flow with the take-home salary calculator.

Read the Estimate, Then Verify

This calculator gives an indicative estimate based on Federal Decree-Law No. 33 of 2021. It does not model unpaid-leave deductions, free-zone or DIFC-specific schemes (which run their own end-of-service systems), or any contractual enhancement above the statutory minimum. Treat the result as a planning aid, and confirm your final entitlement with MOHRE or a qualified labour-law professional before relying on it.