UAE Gratuity Calculation: The Complete 2026 Guide
If you're leaving a job in the UAE, your employer owes you an end-of-service gratuity — a lump sum based on your basic salary and years of service. The rules changed with the 2022 Labour Law reform (Federal Decree-Law No. 33 of 2021), and a lot of outdated advice is still floating around online. Here's exactly how it works today.
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The formula: 21 days, then 30 days
Gratuity is based on your basic salary only — not your total salary. Housing allowance, transport allowance, bonuses and commissions are excluded.
- For each of your first 5 years of service, you earn 21 days' basic pay per year.
- For every year beyond 5 years, you earn 30 days' basic pay per year.
Your daily wage is calculated as basic monthly salary × 12 ÷ 365. Multiply that by the number of gratuity days you've earned to get your payout.
The 2-year salary cap
No matter how long you've worked, total gratuity is capped at two years' basic salary. If you've been at the same company for 20+ years on a high basic salary, this cap is the number that usually matters most — do the math both ways and use whichever is lower.
Does resigning reduce your gratuity?
Under the old law, resigning before 5 years cut your gratuity significantly. That's no longer true. Since the 2022 reform, gratuity is calculated the same way whether you resign or are terminated, as long as you completed at least 1 full year of continuous service. Resign before 1 year, and you're not entitled to gratuity at all.
Frequently asked questions
Is gratuity calculated on basic salary or total salary?
Do I get gratuity if I resign?
Is there a maximum gratuity amount?
What if I was on unpaid leave?
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