UAE gratuity rules explained

Plain-English guide to UAE end-of-service gratuity under the 2022 Labour Law: who qualifies, the 21/30-day formula, the two-year cap, resignation, unpaid leave, free zones and how to check your final settlement.

Last updated 19 October 2026

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End of service benefit under UAE Labour Law 2022 (21/30-day rule).

Who gets gratuity

Every full-time foreign employee in the UAE private sector who completes at least one year of continuous service is entitled to end-of-service gratuity under Article 51 of Federal Decree-Law 33 of 2021. UAE nationals are enrolled in the GPSSA pension instead. Part-time and flexible workers receive a pro-rated amount under Cabinet Resolution 1 of 2022.

The formula

Gratuity is paid on basic salary only: 21 days' basic for each of the first five years and 30 days' basic for each year after that, with fractions of a year paid pro rata. The daily rate is basic ÷ 30. The total cannot exceed two years' basic salary. A AED 10,000 basic after seven years gives 5 × 7,000 + 2 × 10,000 = AED 55,000.

What changed in 2022

Under the old law, resigning from an unlimited contract cut your gratuity by two-thirds (under 3 years) or one-third (3–5 years). The 2022 law abolished unlimited contracts and the reductions: you now receive the full accrued amount whether you resign or are terminated. The only exception is dismissal for the gross-misconduct grounds in Article 44, and even that is frequently overturned in court.

Things that reduce or change it

Unpaid leave days are deducted from service. Basic salary is what is written in your MOHRE contract, not what you negotiated verbally — check it, because employers set basic as low as 40% of the package. Employers may deduct amounts you legitimately owe (loans, unreturned equipment) but not training costs unless contractually agreed. Payment is due within 14 days of your last working day.

Free zones and alternatives

Most free zones apply the federal law. DIFC and ADGM replaced gratuity with funded savings plans (DEWS and the ADGM equivalent) where the employer contributes 5.83–8.33% of basic monthly. Elsewhere, the federal government is rolling out an optional Voluntary Alternative End-of-Service Benefits scheme that invests contributions instead of paying a lump sum.

Checking your settlement

Ask HR for the calculation sheet showing basic salary, joining date, last working day, unpaid leave and the 21/30-day split. Compare it against the calculator. If it is short, raise it in writing; unresolved disputes go to MOHRE, which refers claims above AED 50,000 to the labour court — most are settled at the MOHRE stage.

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