{"id":128,"date":"2026-10-14T05:45:00","date_gmt":"2026-10-14T05:45:00","guid":{"rendered":"https:\/\/vivosgroup.com\/ae\/?p=128"},"modified":"2026-10-05T08:13:16","modified_gmt":"2026-10-05T08:13:16","slug":"uae-end-of-service-gratuity-calculation","status":"publish","type":"post","link":"https:\/\/vivosgroup.com\/ae\/insights\/uae-end-of-service-gratuity-calculation\/","title":{"rendered":"UAE End-of-Service Gratuity in 2026: How It Is Calculated for Private Employers"},"content":{"rendered":"\n
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Insights \u00b7 UAE Employment<\/p>\n\n\n\n

UAE End-of-Service Gratuity in 2026: How It Is Calculated for Private Employers<\/h1>\n\n\n\n

Under Article 51 of Federal Decree-Law No. 33 of 2021, a foreign full-time employee in the UAE private sector who completes at least one year of continuous service earns 21 days\u2019 basic wage for each of the first five years and 30 days\u2019 basic wage for each year after that, with part-years paid pro rata. Allowances are excluded, the total cannot exceed two years\u2019 wage, and the employer must pay within 14 days of the contract ending. DIFC and ADGM have their own rules.<\/p>\n\n\n\n

This guide is for HR, payroll and finance leads at UAE employers covered by the federal labour law. It explains who qualifies, what counts as basic wage, a worked example, part-time staff, deductions, payment timing and the voluntary savings scheme under Cabinet Resolution No. 96 of 2023.<\/p>\n<\/div>\n\n\n\n

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Rule<\/th>Position at 2 October 2026<\/th><\/tr>
Legal basis<\/td>Federal Decree-Law No. 33 of 2021, Articles 51 to 53, in force since 2 February 2022<\/td><\/tr>
Who qualifies<\/td>Foreign full-time employees with at least one year of continuous service; Emiratis are covered by the pension system instead<\/td><\/tr>
Rate<\/td>21 days\u2019 basic wage a year for the first five years; 30 days\u2019 basic wage for each later year; part-years pro rata<\/td><\/tr>
Wage used<\/td>Last basic wage; allowances and benefits in kind are excluded<\/td><\/tr>
Cap<\/td>Total gratuity cannot exceed two years\u2019 wage<\/td><\/tr>
Part-time employees<\/td>Pro rata to contracted annual hours against a full-time contract (Cabinet Resolution No. 1 of 2022, Article 30)<\/td><\/tr>
Payment deadline<\/td>Within 14 days of the end of the contract, with all other dues<\/td><\/tr>
Alternative scheme<\/td>Voluntary savings scheme: employer pays 5.83% of monthly basic wage (under five years\u2019 service) or 8.33% (five years or more)<\/td><\/tr><\/tbody><\/table><\/figure>\n<\/div>\n\n\n\n
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Who qualifies and what counts as basic wage<\/h2>\n\n\n\n

Gratuity is governed by Federal Decree-Law No. 33 of 2021, which the Ministry of Human Resources and Emiratisation (MoHRE) confirmed came into force on 2 February 2022. Under Article 51, a foreign full-time employee who completes one year or more of continuous service is entitled to a gratuity when the employment ends. Emirati employees are covered by the pensions and social security legislation instead. Once the first year is complete, part-years count pro rata, and a probation period counts as service if the employee passes it and stays on.<\/p>\n\n\n\n

The calculation uses the basic wage only. The law defines basic wage as the wage set in the employment contract, excluding any allowances or benefits in kind, so housing, transport and other allowances drop out even when they make up a large share of the package. Article 51 also uses the last basic wage the employee received, not an average, which means a pay rise shortly before an exit increases the gratuity for every year of service.<\/p>\n\n\n\n

Days of absence without pay do not count as service. The total gratuity cannot exceed two years\u2019 wage; measured against the basic wage, that cap is only reached after roughly 25 years. The employer may deduct amounts the employee owes under the law or a court ruling, following the Executive Regulations in Cabinet Resolution No. 1 of 2022. The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) have their own employment laws and are outside the scope of this guide.<\/p>\n<\/div>\n\n\n\n

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A worked example<\/h2>\n\n\n\n

The law does not say how to convert a monthly basic wage into a daily rate. The most common method in published calculations divides the monthly basic wage by 30. Take an employee who joined on 1 April 2019 and whose last working day is 30 September 2026: 7 years and 6 months of service with no unpaid leave. The basic wage is AED 12,000 a month, plus AED 6,000 of allowances that are ignored. The daily basic wage is AED 400.<\/p>\n\n\n\n

The first five years earn 5 \u00d7 21 \u00d7 AED 400, or AED 42,000. The remaining 2.5 years earn 2.5 \u00d7 30 \u00d7 AED 400, or AED 30,000. The gratuity is AED 72,000, well below the two-year cap of AED 288,000 on the basic wage. Had the employee taken one month of unpaid leave, service would fall to 7 years and 5 months and the gratuity to AED 71,000.<\/p>\n\n\n\n

Some employers instead spread the annual basic wage over 365 days, giving AED 394.52 a day and about AED 71,014 here. Both methods appear in practice, so set one out in your HR policy and use it for every leaver and for monthly accruals. The gratuity is paid with the rest of the final settlement, including unpaid salary and other dues.<\/p>\n<\/div>\n\n\n\n

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Part-time staff and the alternative savings scheme<\/h2>\n\n\n\n

For part-time employees, Article 30 of the Executive Regulations prorates the full-time gratuity by hours. The annual working hours in the contract are divided by the annual hours of a full-time contract, and that percentage is applied to the gratuity a full-time employee would receive. An employee contracted for 1,040 hours a year, where a full-time contract has 2,080, receives 50% of the full-time amount.<\/p>\n\n\n\n

Cabinet Resolution No. 96 of 2023 created a voluntary alternative. According to the UAE Government portal, employers in the private sector and free zones can enrol employees in MoHRE-approved investment funds instead of accruing a lump sum. The employer contributes 5.83% of the monthly basic wage for employees with under five years\u2019 service and 8.33% from five years, and contributions must reach the fund within 15 days of the start of each month. Employees may add voluntary contributions on top.<\/p>\n\n\n\n

Gratuity stops accruing from the enrolment date. The amount earned up to that date is preserved, calculated on the basic wage at enrolment, and paid when the employment ends. Law firm commentary notes that the scheme is optional for employers but binding for the employees an employer chooses to enrol, and that DIFC and ADGM employers are outside it.<\/p>\n<\/div>\n\n\n\n

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Gratuity checklist for employers<\/h2>\n\n\n\n