The legal formula under Federal Decree-Law No. 33 of 2021
End-of-service gratuity for private-sector employees in the UAE is set by Article 51 of Federal Decree-Law No. 33 of 2021 — the UAE Labour Law in force since 2 February 2022. A full-time foreign worker who completes at least one year of continuous service is entitled to a gratuity of 21 calendar days of basic wage for each of the first five years of service, and 30 calendar days of basic wage for each additional year beyond the fifth.
The daily wage is your basic monthly salary divided by 30, so 21 days equals 0.7 of a month of basic pay and 30 days equals a full month. Example: seven years of service on a basic salary of AED 10,000 earns 5 × 21 + 2 × 30 = 165 days, which is 165 × (10,000 ÷ 30) = AED 55,000.
Basic salary only — allowances don't count
Gratuity is calculated on your last basic wage, not your total package. Housing allowance, transport, utilities, bonuses, commission and overtime are all excluded. If your offer letter splits AED 20,000 into AED 12,000 basic plus AED 8,000 in allowances, gratuity accrues on the AED 12,000 only.
That structure matters: two employees with identical take-home pay can leave with very different gratuities. The basic-versus-allowance split in your contract is the single biggest driver of your end-of-service number, so check it before you sign.
Resignation no longer reduces your gratuity
Under the old Federal Law No. 8 of 1980, employees on unlimited contracts who resigned lost part of their gratuity — one third off between one and three years of service, and two thirds off between three and five years (Articles 137–138 of the repealed law). Those reductions were abolished when Decree-Law 33/2021 took effect on 2 February 2022.
Today all employment contracts are fixed-term in form, and the full Article 51 gratuity is payable whether you resign or are terminated, provided you have completed one year of continuous service. If a calculator still asks whether you resigned in order to cut the result, it is applying repealed law.
Partial years and the two-year cap
Fractions of a year are paid pro-rata, as long as you have crossed the one-year threshold. Three and a half years of service earns 3.5 × 21 = 73.5 days of basic wage.
Article 51 also caps the total: the gratuity may not exceed two years' wage — 24 months of basic salary. On the 21/30-day accrual the cap only starts to bite after roughly 27 years of service, so it matters mainly for very long tenures.
Who is covered — and who isn't
Article 51 applies to full-time foreign employees in the mainland private sector. UAE and GCC nationals are enrolled in national pension schemes (GPSSA and equivalents) instead of gratuity. Domestic workers fall under their own law, and government employees have separate rules. Part-time and other non-full-time work patterns accrue gratuity on a pro-rated basis set by the Executive Regulations (Cabinet Resolution No. 1 of 2022).
Days of unpaid absence are excluded from the service-period calculation, and the employer may lawfully deduct amounts the employee owes it from the gratuity.
Free zones: DIFC and ADGM are different
Most free zones — JAFZA, DMCC, Dubai Internet City and others — follow the federal Labour Law formula above. The two financial free zones do not. DIFC replaced gratuity in February 2020 with DEWS, a funded defined-contribution plan: employers pay 5.83% of basic salary monthly (rising to 8.33% after five years of service) into an invested savings plan. ADGM runs a comparable regime under its own employment regulations.
If your employment is registered in DIFC or ADGM, this calculator's result does not represent your entitlement — check your DEWS (or equivalent) account balance instead.
When it must be paid — plus worked examples
All end-of-service entitlements must be paid within 14 days of the contract end date (Article 53). Since Cabinet Resolution No. 96 of 2023, mainland employers may also opt into a voluntary funded savings scheme in place of the accrual — if your employer joined it, the covered period of your entitlement sits in that fund. MOHRE runs an official calculator and a labour-claims channel if the amount paid does not match your own numbers.
Worked examples: two years at AED 8,000 basic → 2 × 21 = 42 days → 42 × (8,000 ÷ 30) = AED 11,200. Three and a half years at AED 9,000 basic → 73.5 days × 300 = AED 22,050. Seven years at AED 10,000 basic → 165 days → AED 55,000. Thirty years at AED 10,000 would accrue 855 days (AED 285,000) but is capped at 24 months of basic pay — AED 240,000.