Gratuity Calculator UAE
Calculate your end-of-service benefits as per UAE Labour Law instantly. Enter your salary, employment dates, and reason for exit below.
Total Gratuity Payable
AED 0.00
Disclaimer
Estimates based on UAE Labour Law (Federal Decree-Law No. 33 of 2021, Article 51). Calculated on basic salary only — excludes allowances, housing, transport, and bonuses. Unpaid leave is excluded from service calculations. Applies to UAE private sector only (excludes DIFC & ADGM). Actual amounts may vary based on your employment contract. For official matters, consult MOHRE or a legal professional.
UAE Gratuity Quick Facts
Minimum service required for gratuity eligibility
Employer must pay gratuity within this timeline
Gratuity rate per year (for first 5 years)
Gratuity rate per year (after 5 years)
Gratuity is 100% tax-free in UAE
Maximum gratuity cap (of basic salary)
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What is Gratuity in UAE?
Gratuity is a mandatory end-of-service benefit payment that UAE employers must provide to employees who complete at least one year of continuous service. The amount is calculated based on the employee's basic salary and length of service, as per UAE Federal Labour Law No. (33) of 2021.
Key Gratuity Facts:
- Eligibility: Minimum 1 year of continuous service
- Payment Timeline: Within 14 days of contract termination
- Tax Status: 100% tax-free in UAE
- Calculation Basis: Basic salary (excluding allowances)
- Maximum Cap: 2 years of total basic salary
Who is Eligible for Gratuity?
Employees who complete at least one year of continuous service with an employer are eligible for gratuity. Employees who resign before completing one year are not entitled to gratuity pay.
When is Gratuity Paid?
UAE employers are required by law to pay gratuity within 14 days from the date of contract termination. Failure to comply with this timeline can result in legal penalties and additional compensation owed to the employee.
UAE Gratuity Calculation Formula
| Years of Service | Gratuity Rate | Calculation |
|---|---|---|
| 1-5 years | 21 days/year | Years × Salary × (21/30) |
| 5+ years | 21 days (first 5 years) + 30 days (additional years) | (5 × Salary × 21/30) + ((Years-5) × Salary) |
For 1-5 years of service:
Gratuity = n × b × (21/30)For more than 5 years of service:
Gratuity = (5 × b × (21/30)) + ((n - 5) × b × (30/30))Where:
- G = Total gratuity amount in AED
- n = Number of years of service
- b = Basic monthly salary in AED
- 21/30 = 21 days' pay (for ≤5 years)
- 30/30 = 30 days' pay (for >5 years)
Gratuity Calculation Example
Let's say you earn AED 10,000 per month and have worked for 4 years:
Daily Salary = AED 10,000 ÷ 30 = AED 333.33
Gratuity per Year = 21 days × AED 333.33 = AED 7,000
Total Gratuity = 4 years × AED 7,000 = AED 28,000
Final Gratuity = AED 28,000.00The calculation is based on 21 days' basic salary for each of the 4 years of service (since service is 5 years or less). Each year of service earns you 21/30 (70%) of your monthly basic salary.
UAE Gratuity Conditions & Eligibility Rules
Resignation vs Termination
Understanding the difference between resignation and termination is crucial for your gratuity entitlement. When you resign after completing your contract term or after completing at least one year of service, you are entitled to full gratuity. However, if you resign before completing one year of service, you are not entitled to any gratuity. On the other hand, if your employer terminates your employment without valid cause, you are entitled to full gratuity regardless of your tenure. The termination must be unjustified for this rule to apply.
Limited vs Unlimited Contracts
Under the new UAE Labour Law (Federal Decree-Law No. 33 of 2021), there is no significant difference in gratuity calculation between limited (fixed-term) and unlimited contracts. Both contract types follow the same gratuity calculation formula based on years of service and basic salary. The key factor that determines your gratuity amount is your length of service, not the type of contract you hold. This simplification helps employees understand their rights without worrying about complex contract distinctions.
What's Included in Basic Salary
Gratuity is calculated only on your basic salary as stated in your employment contract. This is an important distinction that affects your final gratuity amount significantly. Allowances such as housing, transport, utilities, education, or other variable components are NOT included in gratuity calculations unless they are explicitly part of your basic salary in your contract. Before calculating your gratuity, review your employment contract to understand what constitutes your basic salary. Some employers structure compensation packages with lower basic salary and higher allowances, which can result in lower gratuity payouts.
Part-Year Gratuity Calculation
UAE Labour Law calculates gratuity based on complete years of service. Service periods of less than one year typically do not qualify for gratuity if you resign. However, if you have worked more than one year, the gratuity calculation considers only the completed years of service. For example, if you have worked 3 years and 7 months, your gratuity will be calculated based on 3 years of service. The partial year (7 months in this case) is not included in the calculation. This is why the timing of your resignation can impact your gratuity amount.
Notice Period Requirements
The notice period affects your gratuity in specific ways. Under UAE Labour Law, the standard notice period is 30 days for unlimited contracts. While the notice period itself does not affect the gratuity calculation formula, failing to serve the required notice period may allow your employer to make deductions from your gratuity. If you leave without providing the required notice, your employer can deduct from your gratuity an amount equivalent to the notice period not served. This deduction is proportionate to your basic salary and the number of notice days not served.
Gratuity for Multiple Employers
Gratuity is employer-specific and each employment contract is treated independently. Gratuity does not transfer between employers or accumulate across different companies. If you work for multiple employers over your career, each employer is responsible for paying gratuity based on your service period with them only. Previous service with other employers does not count toward gratuity calculation with your current employer. When changing jobs, ensure you collect your gratuity from your previous employer before joining the new one, as each employment relationship stands alone for gratuity purposes.
Gratuity Payment Rules & Employer Deductions
Payment Timeline
UAE employers are required by law to pay gratuity within 14 days from the date of termination of the employment contract. This timeline is strictly enforced, and failure to comply can result in legal penalties and additional compensation owed to the employee. If your employer delays gratuity payment beyond 14 days, you have the right to file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE). The 14-day period starts from the last working day, ensuring employees receive their end-of-service benefits promptly.
When Can Employers Deduct from Gratuity
UAE Labour Law specifies circumstances under which employers can legally make deductions from gratuity payments. Employers can deduct from gratuity to recover any advance payments or loans owed to the company. If you fail to serve the required notice period, your employer may deduct an amount equivalent to the notice period not served. Additionally, if you are terminated for serious misconduct such as fraud, theft, violence, or causing material loss to the company (as defined in Article 44 of UAE Labour Law), you may forfeit your gratuity entirely. Arbitrary or unjustified deductions are not permitted under the law.
Gratuity Denial Circumstances
An employer cannot deny gratuity to eligible employees who have completed at least one year of service without valid cause. Gratuity denial is only permitted in specific situations: if the employee is terminated for serious misconduct as defined in Article 44 of UAE Labour Law, if the employee resigns before completing one year of service, or if the employment contract is terminated due to the employee's violation of legal provisions or the employment contract. Employees who believe their gratuity has been wrongfully denied can file a complaint with MOHRE or pursue legal action to recover their entitlement.
Documentation and Proof
When leaving employment, it's important to maintain proper documentation for your gratuity claim. Request a formal calculation of your gratuity from your employer's HR or finance department. Keep copies of your employment contract, salary slips, bank statements, and any correspondence related to your gratuity payment. If your employer fails to pay gratuity within the 14-day period, these documents become essential evidence for any legal proceedings or MOHRE complaints. Written confirmation of your employment duration and basic salary helps ensure accurate gratuity calculation and protects your rights.
Dispute Resolution
If you have a disagreement with your employer regarding gratuity calculation or payment, UAE provides several avenues for dispute resolution. The first step is typically filing a complaint with the Ministry of Human Resources and Emiratisation (MOHRE), which will attempt to mediate between the employee and employer. If mediation fails, the dispute can be referred to the relevant labour court for adjudication. Employees should act promptly as there are time limits for filing gratuity-related complaints. Legal consultation may be advisable for complex cases or significant gratuity amounts.
Taxation Rules for Gratuity in UAE
One of the most attractive aspects of working in the UAE is the tax-free environment. The UAE does not impose personal income tax on residents, which includes all employment-related income.
Gratuity is 100% tax-free in the UAE. Whether you work in the private sector or government sector, your entire gratuity amount is paid to you without any tax deductions. This makes the UAE one of the most favorable countries for end-of-service benefits.
The tax-free nature applies to:
- Private sector employees
- Government sector employees
- Free zone employees
- All nationalities (UAE nationals and expatriates)
However, if you plan to transfer your gratuity to your home country, you may be subject to local tax laws depending on your country of residence's tax treaties with the UAE.
Frequently Asked Questions
Common questions about gratuity calculation in UAE.
Under UAE Labour Law, employees who have completed at least one year of continuous service with an employer are eligible for gratuity. Employees who resign before completing one year are not entitled to gratuity pay. The gratuity must be paid within 14 days of the end of employment contract.
Have more questions? Contact our team