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Limited Contract Gratuity Calculator UAE
Work out gratuity when a fixed-term contract ends, is renewed or is left early. One formula applies to every UAE contract since 2022.
Updated 11 June 2026 · Federal Decree-Law No. 33 of 2021 (UAE Labour Law)
Full gratuity for the whole service period when a fixed-term contract ends or is not renewed.
How the amount is worked out
Three steps, shown with your own figures once you enter them.
- Find the daily basic
Basic salary ÷ 30Gratuity uses the last drawn basic salary, without allowances.
- 21 days a year for the first five years
Daily basic × 21 × yearsPart years count pro rata once one full year is complete.
- 30 days a year after that
Daily basic × 30 × years over 5The total is capped at 2 years' basic salary.
In this article
Limited contract gratuity rules in UAE (2026)
Since February 2022, every UAE private-sector contract is a limited (fixed-term) contract — unlimited contracts were abolished by Federal Decree-Law No. 33 of 2021. One gratuity formula now applies to everyone: 21 days' basic pay per year for the first 5 years, 30 days per year after, capped at 2 years' total salary.
How the old and new rules differ
| Situation | Old law (pre-2022) | Current law (2026) |
|---|---|---|
| Contract completion | Full gratuity | Full gratuity |
| Resigning mid-contract (limited) | Risk of forfeiting gratuity | Full gratuity (≥1 year service) |
| Resigning <5 years (unlimited) | Reduced to 1/3 or 2/3 | N/A — unlimited contracts abolished; full gratuity |
Worked example: two renewed 2-year contracts
Basic salary AED 12,000, two consecutive 2-year contracts (4 years total). Renewal does not reset service — gratuity counts from the original start date:
- Daily rate = AED 12,000 ÷ 30
- AED 400.00
- Per year = 21 × 400
- AED 8,400.00
- Gratuity = 4 years × 8,400
- AED 33,600.00
Converted unlimited contracts
If you originally signed an unlimited contract that was later converted to a fixed-term contract, your gratuity is still calculated on your full continuous service from your original joining date. Conversion changes the contract type, not your accrued entitlement. For the wider legal context, see the UAE Labour Law 2026 guide and employment contracts guide.
Related scenarios
Leaving by choice? See gratuity on resignation. Want your complete settlement including leave encashment? End of service calculator.
Questions, answered.
Not anymore. Since Federal Decree-Law No. 33 of 2021 took effect in February 2022, all UAE private-sector contracts are fixed-term (limited), and a single gratuity formula applies: 21 days' basic pay per year for the first 5 years and 30 days per year after, capped at 2 years' salary. The old limited-vs-unlimited distinctions are gone.
Yes. When your fixed-term contract ends (completion or non-renewal), you receive full gratuity for your entire service period, provided you completed at least 1 year. The gratuity is part of your final settlement, payable within 14 days of the contract end date.
Under the current law, you still receive full gratuity for your completed service if you have at least 1 year of service — resigning mid-contract no longer forfeits gratuity as it could under the pre-2022 rules. You must serve your contractual notice period (30-90 days), or compensation in lieu can be offset against your settlement.
No. The 2021 labour law abolished unlimited contracts, and employers were required to convert existing unlimited contracts to fixed-term contracts. Service accrued under an old unlimited contract still counts toward your total gratuity calculation — your start date for gratuity purposes is when you joined the company, not when the contract was converted.
No. When a fixed-term contract is renewed with the same employer, your service is treated as continuous. Gratuity is calculated on your total years with the employer from your original start date, not per contract term.
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