Not legal advice
Content summarises labour law as published by each GCC ministry, current as of May 2026. Not a substitute for legal advice. Employment law is jurisdiction-specific and subject to change. For contracts, disputes, visa issues, or any decision with legal consequences, consult a qualified labour lawyer licensed in your jurisdiction.
Not legal advice
This guide summarizes United Arab Emirates employment law for informational use only. It is not a substitute for advice from a qualified labour lawyer. Employment law is complex and jurisdiction-specific. For contracts, disputes, visas, or decisions with legal consequences, consult a licensed labour lawyer in your jurisdiction.
Quick summary
End-of-service gratuity is 21 days of basic salary per year for the first five years and 30 days per year thereafter, capped at two years' basic salary. Allowances (housing, transport) are excluded. Resignation in the first year forfeits gratuity; partial years vest on a sliding scale through year five.
The calculation
Under Article 51 of Federal Decree-Law 33/2021:
- Years 1–5: 21 days of basic salary per year of service.
- Years 5+: 30 days of basic salary per year of service, on top of the years-1–5 entitlement.
- Cap: total gratuity cannot exceed two years' basic salary, regardless of tenure.
The 21- and 30-day figures are converted from a daily rate calculated as the monthly basic salary divided by 30, not divided by working days. So one month of gratuity equals one month of basic salary.
Basic salary, not total compensation
Gratuity is calculated on basic salary only. Housing allowance, transport allowance, school-fee allowance, mobile phone allowance, bonuses, and commission are all excluded, even when they're a fixed monthly amount. Practically, this means a candidate earning AED 30,000 total with a 50/50 split between basic and allowances gets gratuity on AED 15,000, not on AED 30,000. Negotiating a higher basic-to-allowance split has a real effect on your end-of-service number.
Vesting and minimum service
You need to complete at least one continuous year of service to be entitled to any gratuity. For service over one year, partial-year accrual is calculated pro-rata.
Resignation vs termination, the sliding scale
In practice the sliding scale that used to reduce gratuity on voluntary resignation under the 1980 Law has been substantially flattened under the 2022 reform, the standard reading of Article 51 is that gratuity is paid in full on both resignation and termination once service exceeds one year. Cabinet Resolutions have refined the mechanics; the Tenure gratuity calculator implements the MOHRE-published reading. Confirm with a lawyer if your situation involves dismissal for cause (Article 44 of the Decree-Law).
Payment timeline
The employer must pay gratuity within 14 days of the contract end date. Late payment can be reported to MOHRE and, ultimately, the Labour Court. Gratuity is paid in addition to any unpaid leave, unpaid bonus, and notice-period pay.
Worked example
Tariq worked for a Dubai consultancy from 1 January 2019 to 31 December 2025, exactly seven years. His final basic salary was AED 18,000/month. His total compensation was AED 26,000/month but only the basic counts. First five years: 5 × 21 days = 105 days × (AED 18,000 ÷ 30) = AED 63,000. Years 6 and 7: 2 × 30 days = 60 days × AED 600/day = AED 36,000. Total: AED 99,000. Well below the two-year cap (AED 432,000), so no reduction applies.
Frequently asked questions
Does gratuity include my housing allowance?
No. Gratuity is calculated on basic salary only. Housing, transport, school fees, and other allowances, even regular monthly ones, are excluded. This is one of the strongest reasons to negotiate a higher basic-to-allowance split when joining.
Do I get gratuity if I resign?
Yes, once you've completed at least one year of service. Under Federal Decree-Law 33/2021, voluntary resignation no longer triggers the old reduced-payout sliding scale that applied under the 1980 law.
Is there a cap on gratuity?
Yes. Total gratuity is capped at two years' basic salary. This affects employees with very long tenure, broadly, anyone past their 21st year of service is past the cap.
What happens if I'm terminated for cause?
Termination for cause under Article 44 (gross misconduct, deception, repeated misconduct, etc.) can result in forfeiture of gratuity and unpaid notice. The list of qualifying causes is narrow and the employer must follow specific procedures. Disputed for-cause terminations are common, speak to a lawyer.
When do I get paid?
Within 14 days of the contract end date. Late payment is enforceable through MOHRE and the Labour Court, and the law provides for compensation if the delay is unjustified.
When to consult a labour lawyer
Consult a labour lawyer before accepting gratuity if: your employer is calculating on a different basic salary than your payslip shows, you've been terminated for cause and dispute the grounds, you're a senior executive with a contractual gratuity formula that overrides the statutory one, or your service spans the 2022 reform date and you're being told the old rules apply.