If you are leaving a private-sector job in the UAE, your final payment may include end-of-service gratuity. The amount depends mainly on your last basic salary and length of continuous service. It is calculated on basic salary, rather than the total salary including allowances.
Who qualifies?
Under the UAE Labour Law, a full-time expatriate employee becomes eligible after completing at least one year of continuous service. Once that first year is complete, an additional part-year of service is counted proportionately. Days of unpaid absence are excluded from the service period used for the calculation. Different rules apply to UAE nationals under pension and social security legislation, while part-time and other work arrangements have their own calculation methods.
How much gratuity is payable?
For an eligible full-time expatriate employee, the calculation is:
| Period of service | Gratuity rate |
|---|---|
| First five years | 21 days of basic salary for each year |
| Each year after five years | 30 days of basic salary for each additional year |
The total gratuity cannot exceed the equivalent of two years’ wages.
For example, suppose an employee’s last monthly basic salary is AED 3,000 and they have completed seven and a half years of eligible service. Using AED 100 as the daily basic wage for this illustration, the first five years produce AED 10,500 (105 days × AED 100). The remaining two and a half years produce AED 7,500 (75 days × AED 100). The illustrative gratuity is AED 18,000, subject to the employee’s actual service record and applicable rules.
When must the employer pay?
The employer must pay outstanding wages and other end-of-contract entitlements within 14 days of the contract’s end date, according to Article 53 of the UAE Labour Law. This deadline covers the final settlement, including gratuity where it is due.
What about the Savings Scheme?
The UAE also has a voluntary alternative end-of-service benefits system. Participating employers can make contributions to approved investment funds for enrolled employees. If your employer uses this scheme, ask how it applies to your period of service and review your fund statement alongside your final settlement.
Before leaving a job, check the basic salary stated in your contract, your joining and leaving dates, any unpaid absences, and the breakdown of your final settlement. These details will help you identify and discuss any difference in the amount paid.
