UAE Gratuity (End of Service) in 2025: Eligibility, Formula and Accurate Calculation + Free Calculator
Learn how gratuity is calculated in the UAE for full‑time employees: eligibility, how basic wage and years of service determine the amount, the standard 21/30‑day rules per year, resignation vs termination notes, and statutory maximum caps. Use our free Gratuity Calculator to estimate your EOS precisely.
Updated: Oct 27, 2025 · 10 min read · By ADAD Team
Quick summary
- Eligibility: EOS gratuity is typically due after completing at least one year of continuous service (exceptions apply).
- Basis: Calculated on basic wage (excluding allowances) and years of service.
- Rates: Commonly 21 days of basic wage per year for the first 5 years, then 30 days per year thereafter; pro‑rated for partial years.
Eligibility
Full‑time private sector employees are generally entitled to EOS gratuity after completing one year of service. Certain termination reasons (e.g., gross misconduct) may affect entitlement. Always refer to the latest UAE Labour Law and your contract.
Gratuity formula (typical)
- First 5 years: 21 days of basic wage for each year of service.
- Beyond 5 years: 30 days of basic wage for each additional year.
- Partial years: Calculated pro‑rata based on months/days.
Note: The law caps the total gratuity at a maximum equivalent to 2 years of wage. Contract terms and termination reasons can influence eligibility; always verify against current law and official guidance.
Resignation vs termination
Under current law, gratuity is tied to length of service rather than the old limited/unlimited contract distinctions. Some scenarios (such as dismissal for specific causes) can affect or forfeit gratuity. Check official guidance for your case.
Maximum caps
Total EOS gratuity is capped by law (commonly at two years of wage). Your contract and the latest regulations govern exact limits.
How to calculate accurately
- Confirm eligibility and termination reason.
- Identify basic wage (exclude allowances/benefits).
- Count complete years and prorate partial year service.
- Apply 21/30‑day rules and ensure total does not exceed the legal cap.
Use our Gratuity Calculator to compute this instantly.
Frequently Asked Questions
How is UAE gratuity calculated exactly?
UAE gratuity is calculated based on your basic salary only (excluding allowances). For the first 5 years of service, you receive 21 days' basic salary for each year. For years beyond 5, you receive 30 days' basic salary per year. Example: If your basic salary is AED 10,000 and you worked 7 years, your gratuity = (21 × 10,000/30 × 5) + (30 × 10,000/30 × 2) = AED 35,000 + AED 20,000 = AED 55,000.
Do I get gratuity if I resign?
Yes, under the new UAE Labor Law (Federal Decree-Law No. 33 of 2021), employees who resign are entitled to full gratuity if they have completed at least one year of continuous service. The old rules that reduced gratuity for resignation have been largely removed. However, if you are terminated for gross misconduct under Article 44, you may forfeit your gratuity entitlement.
Is housing allowance included in gratuity calculation?
No. Gratuity is calculated based on basic salary only. Housing allowance, transport allowance, phone allowance, and other benefits are not included. This is why it's important to know your salary breakdown. If your contract shows a total package without separating basic salary, you should clarify with HR as this affects your gratuity significantly.
What is the maximum gratuity I can receive?
The UAE Labor Law caps total gratuity at two years' worth of your total salary (not just basic). This means regardless of how many years you work, the maximum gratuity cannot exceed 24 months of your full salary package. For long-tenured employees (15+ years), this cap can significantly reduce the expected amount.
When should my employer pay gratuity?
According to UAE law, employers must pay gratuity within 14 days of the employment contract ending. If your employer delays beyond this, you can file a complaint with MOHRE (Ministry of Human Resources and Emiratisation). Keep copies of your contract, salary slips, and final settlement documents as evidence.
Do UAE nationals receive gratuity?
No, UAE nationals are covered under pension schemes managed by GPSSA (General Pension and Social Security Authority) instead of the end-of-service gratuity system. Employers contribute a percentage of the national employee's salary to the pension fund. The gratuity system applies only to expatriate workers.
Does unpaid leave affect my gratuity?
Extended unpaid leave can potentially affect your continuous service calculation. Short periods of approved leave typically don't impact gratuity, but prolonged absences might. Check your company's HR policy and MOHRE guidelines. It's best to get written confirmation from HR about how any leave periods affect your service record.
This is a general guide. For exact entitlements, consult MOHRE guidance and your employment contract.