UAE gratuity is your last basic salary, turned into a daily rate, multiplied by a number of days that depends on how long you worked: 21 days for each of your first five years and 30 days for every year after that. You can do the whole thing on the back of an envelope.
In short
- Daily rate = monthly basic salary ÷ 30.
- Years 1 to 5: 21 days each. Year 6 onwards: 30 days each.
- You need at least one full year of service. After that, part years count in proportion.
- Only basic salary counts, and the total cannot be more than two years of it.
The formula
First five years: daily rate × 21 × number of years
Later years: daily rate × 30 × number of years
Gratuity = the two amounts added together
The rule comes from Article 51 of the UAE Labour Law, Federal Decree-Law No. 33 of 2021. It applies to full-time foreign employees in the private sector, whether they work on the mainland or in most free zones.
What you need before you start
- Your last basic salary. The basic monthly figure on your contract or latest payslip. Leave out housing, transport and every other allowance.
- Your first working day and your last working day. The last working day is the end of your notice period, not the day you handed in your resignation.
- Any unpaid leave. Days of unpaid absence are taken out of your service.
Step by step, with a real example
Sara is an accountant on a basic salary of AED 6,000. She joined on 15 March 2019 and her last working day is 30 September 2026. That is 7 years, 6 months and 16 days.
- Find the daily rate6,000 ÷ 30 = AED 200 a day.
- Count the first five years200 × 21 = AED 4,200 for each year. Five years: AED 21,000.
- Count the complete years after the fifthYears six and seven earn 30 days each, which is one full month of basic salary: 2 × 6,000 = AED 12,000.
- Add the part yearFrom 15 March to 30 September 2026 is 200 days. A full eighth year would be worth AED 6,000, so 200 days is worth 6,000 × 200 ÷ 365 = AED 3,288.
- Add it up and check the ceiling21,000 + 12,000 + 3,288 = AED 36,288. Two years of her basic salary is AED 144,000, so the ceiling is nowhere near.
Put the same details into the gratuity calculator and you will see the same eight lines, one for each year.
How many days you earn
| Service | Days of basic pay | In months of basic salary |
|---|---|---|
| Under 1 year | 0 | 0 |
| 1 year | 21 | 0.7 |
| 3 years | 63 | 2.1 |
| 5 years | 105 | 3.5 |
| 8 years | 195 | 6.5 |
| 10 years | 255 | 8.5 |
| 20 years | 555 | 18.5 |
The full table for every year from 1 to 30 is on our gratuity chart.
Part years: months and days
Once you have completed your first year, the law pays fractions of a year in proportion. Someone who leaves after four years and six months is paid for four and a half years, not four.
The law does not spell out the arithmetic, and payroll teams do it in slightly different ways. Some count the days in the part year and divide by 365, which is what our calculator does. Others count months and divide by 12. On a typical salary the two methods land within a few dirhams of each other, so a small gap between your figure and HR's is normal and not worth a dispute.
Which salary counts
Gratuity is based on basic salary only. Housing allowance, transport, phone, food and other allowances are left out, and so are bonuses and overtime. It is calculated on your last basic salary for the whole period, so a rise in your final year increases the gratuity for every year you worked.
If the basic figure on your contract is much lower than your total package, that is allowed, and it is the most common reason gratuity turns out smaller than people expect. More on this in which salary counts for gratuity.
Unpaid leave shortens your service
Days of unpaid absence are not counted as service. Paid annual leave, paid sick leave and public holidays are counted in the normal way.
Example: five calendar years with 90 days of unpaid leave count as roughly four years and nine months. On a basic salary of AED 5,000 that is about AED 16,640 in place of AED 17,500.
The two-year ceiling
Your total gratuity cannot be more than two years of basic salary. On the standard scale an employee only reaches that after a little more than 25 years with the same employer. On a basic salary of AED 10,000 the most you can receive is AED 240,000.
Does it matter how the job ended?
Under the current law, no. Once you have a year of service, the same scale applies whether you resign, your contract expires or your employer ends it. The old reductions for resignation belonged to the previous law. We cover the detail in gratuity on resignation.
Five mistakes that produce a wrong figure
- Using total salary when only basic counts.
- Applying 30 days to all years once you pass five. The first five years stay at 21 days.
- Stopping the clock on the day you resigned. Your notice period is service too.
- Ignoring the part year. Six extra months are worth half a year's gratuity.
- Dividing a 31-day month by 31. The daily rate always uses 30.
Frequently asked questions
What is the formula for gratuity in the UAE?
Basic salary ÷ 30 × 21 × years of service for the first five years, plus basic salary ÷ 30 × 30 × years of service after the fifth. The total is limited to two years of basic salary.
Is gratuity calculated on basic salary or gross salary?
On basic salary only. Allowances such as housing and transport are not included.
Is gratuity based on my first salary or my last salary?
Your last basic salary, applied to all your years of service.
How do I calculate gratuity for 4 years and 6 months?
Take 21 days of basic pay for each of the four full years, then add half of 21 days for the six months. On a basic salary of AED 5,000 that comes to about AED 15,740.
Do I get gratuity for months worked after my last full year?
Yes. Once you have completed one year, extra months and days are paid in proportion.
Does a 31-day month change the daily rate?
No. For gratuity the daily rate is always the monthly basic salary divided by 30.