Last updated: 7 September 2026
When you leave a job in the Emirates, the single biggest payment you are owed is your end-of-service gratuity. Yet most people have no idea what they are entitled to until the final payslip lands — and by then it is hard to argue. This guide explains end of service gratuity in UAE: who qualifies, exactly how it is calculated, the traps that shrink it, and how to check your employer got it right.
Who qualifies for end of service gratuity in UAE
Under the UAE Labour Law, any employee who completes at least one year of continuous service is entitled to gratuity when their employment ends. It applies whether you resign or are terminated — the amount differs, but the entitlement exists either way. Time spent on unpaid leave does not count toward your service period, and the calculation is based on your basic salary, not your total package.
That last point catches most people out. If your package is AED 10,000 made up of AED 5,000 basic plus allowances, your gratuity is calculated on the AED 5,000 — not the AED 10,000. Check your contract now, not on your last day. The rules are published by the Ministry of Human Resources and Emiratisation (MOHRE).
How the calculation actually works
The standard formula for an unlimited/standard contract is:
- 1 to 5 years of service: 21 days of basic salary for each year
- Beyond 5 years: 30 days of basic salary for each additional year
- Cap: total gratuity cannot exceed two years’ total salary
To get your daily rate, divide your monthly basic by 30. So on a basic of AED 6,000, one day is AED 200, and 21 days is AED 4,200 per year of service. Four years of service on that basic works out to roughly AED 16,800.
A worked example
Say your basic salary is AED 8,000 and you served 7 years:
- Daily rate: 8,000 ÷ 30 = AED 266.67
- First 5 years: 5 × 21 × 266.67 = AED 28,000
- Remaining 2 years: 2 × 30 × 266.67 = AED 16,000
- Total gratuity ≈ AED 44,000
Run your own numbers with our UAE gratuity calculator before you have the conversation with HR.
What can reduce or cancel your gratuity
A few situations change the picture. Leaving before completing one full year means no gratuity at all. Dismissal for one of the serious causes set out in the labour law can forfeit it entirely. Unpaid leave periods are excluded from your service count. And any money you genuinely owe the company — a documented loan, for instance — may be deducted from the final settlement.
What should not happen: your gratuity being quietly calculated on a lower "basic" than your contract states, or being withheld because you resigned. If the figure looks wrong, ask HR for the written calculation. If it is still wrong, MOHRE handles labour complaints and the process is free to file.
Getting paid, and getting the money home
Your gratuity, unpaid salary, and any untaken leave should be settled within a short window of your last working day, alongside your visa cancellation. Do not sign a final settlement document until you have checked the arithmetic — signing can be treated as accepting the amount. Once it lands, if you are sending a large sum home, the exchange rate matters far more than the transfer fee: see our guides to sending money from UAE to Pakistan and the best money transfer apps in the UAE. If you are moving on rather than going home, our best banks in UAE for expats guide covers where to park it.
Limited vs unlimited contracts, and what changed
Older UAE contracts came in "limited" (fixed-term) and "unlimited" varieties, and the gratuity rules differed sharply between them — resigning early from an unlimited contract used to cut your entitlement significantly. Since the labour law reforms, all employment contracts moved to a fixed-term model and the penalty structure for resigning was largely removed, which is why the calculation above applies whether you resign or are let go.
If you are on a very old contract, or your employer quotes you reduced rates because you resigned, that is worth challenging — ask them in writing which provision they are applying. Many HR departments still work from outdated templates, and the error is usually in the employer’s favour.
Before you resign: a short checklist
- Find your contract and note the exact basic salary figure — this is the number your gratuity rests on.
- Confirm your joining date and any unpaid leave that will be excluded from service.
- Calculate the expected figure yourself before HR gives you theirs.
- Check your notice period — leaving without serving it can cost you compensation.
- Keep copies of your contract, payslips and any salary-revision letters.
Doing this a week before you resign, rather than on your last day, is the difference between negotiating from evidence and simply accepting whatever appears on the settlement sheet.
Frequently asked questions
Do I get gratuity if I resign? Yes, provided you have completed at least one year of continuous service. Under the current law resignation and termination are treated the same for the core calculation.
Is gratuity based on basic salary or total salary? Basic salary only. Housing, transport and other allowances are excluded, which is why the basic/allowance split in your contract matters so much.
How long does the employer have to pay it? The final settlement is normally due shortly after your last working day, in parallel with visa cancellation. Chase it in writing if it is late.
What if my employer refuses to pay? File a complaint with MOHRE. The service is free and it is a routine process — you do not need a lawyer to start it.
