UAE Gratuity Calculator – Calculate Your End of Service Benefits

What is Gratuity in UAE

Gratuity, also known as end-of-service benefits, is a mandatory payment that employers in the UAE must provide to employees who have completed at least one year of continuous service. This benefit is enshrined in the UAE Labour Law (Federal Decree-Law No. 33 of 2021) and serves as a form of financial security for workers upon termination of their employment contract, whether due to resignation, contract completion, or retirement.

The gratuity payment is calculated based solely on the employee's basic salary, excluding all allowances such as housing, transportation, utilities, and bonuses. According to the Ministry of Human Resources and Emiratisation (MOHRE), this end-of-service benefit applies to all private sector employees working in the UAE mainland and most free zones, regardless of their nationality or job position.

The UAE government has also introduced a voluntary alternative called the Savings Scheme, where employers can invest gratuity contributions into approved investment funds, allowing employees to potentially earn returns on their end-of-service benefits while protecting them from employer insolvency.

Gratuity Calculation Formula

The gratuity calculation in the UAE follows a specific formula outlined in Article 51 of the UAE Labour Law. The amount depends on two primary factors: your years of service and your basic salary. The calculation differs based on whether you have worked for less than or more than five years.

Basic Formula Components

Gratuity Calculation Based on Service Duration

Calculation Examples

Partial Year Calculations

If you have worked for a partial year (for example, 2 years and 6 months), the gratuity is calculated proportionally. The partial year is rounded to the nearest month, ensuring fair compensation for all periods of service completed after the first full year.

Who is Eligible for Gratuity

Understanding gratuity eligibility is essential for both employers and employees in the UAE. The Labour Law clearly defines who qualifies for end-of-service benefits and under what circumstances.

Minimum Service Requirements

To be eligible for gratuity in the UAE, an employee must meet the following conditions:

• Complete at least one year of continuous service with the same employer under a valid employment contract
• Have worked continuously without extended breaks or unpaid leave that would interrupt service continuity
• Hold a valid employment contract registered with the Ministry of Human Resources and Emiratisation (MOHRE)
• Be employed in the private sector (mainland or most free zones)

Eligibility Based on Contract Termination Type

Limited Contracts: Employees who complete their fixed-term contract as agreed are entitled to full gratuity benefits based on their total years of service.

Unlimited Contracts: The gratuity entitlement varies depending on how and when the employment ends:

• Resignation after 1 year but less than 5 years: Employee receives one-third of the gratuity entitlement
• Resignation after 5 years or more: Employee receives full gratuity entitlement
• Termination by employer without cause: Employee receives full gratuity regardless of service duration
• Retirement: Employee receives full gratuity entitlement

Situations Where Gratuity is Not Paid

According to Article 51 of UAE Labour Law, employees are not entitled to gratuity in the following circumstances:

• Dismissal for serious misconduct as outlined in Article 44 of the Labour Law
• Resignation before completing one year of continuous service
• Abandonment of work without proper notice or justification
• During or immediately after the probation period if service is terminated

Special Cases

Death of Employee: In the unfortunate event of an employee's death, the legal heirs are entitled to receive the full gratuity payment.

Part-Time and Flexible Workers: As of 2025, part-time, remote, and flexible workers now qualify for proportional gratuity based on their working hours and contract terms.

How to Use the Calculator

Our UAE gratuity calculator is designed to provide quick and accurate calculations of your end-of-service benefits. Follow these simple steps to calculate your gratuity entitlement:

Step-by-Step Instructions

1. Enter Your First Working Day: Select the date when you officially started working with your current employer. This date should be as per your employment contract or work permit.
2. Enter Your Last Working Day: Select your final working day or planned resignation/retirement date. For future calculations, you can enter an estimated date.
3. Input Your Basic Salary: Enter your current monthly basic salary in AED. Remember to exclude all allowances such as housing, transportation, food, and other benefits. Only your basic salary component is used for gratuity calculations as per UAE Labour Law.
4. Select Your Contract Type: Choose whether you have a limited (fixed-term) or unlimited (open-ended) contract. This affects your entitlement if you resign before completing 5 years of service.
5. Click Calculate: Press the "Calculate Gratuity" button to instantly see your total gratuity entitlement along with a detailed breakdown.

Understanding Your Results

Once calculated, you'll see:

• Total Gratuity Amount: Your complete end-of-service benefit in AED
• Years of Service: Total duration of your employment (including partial years)
• Daily Wage: Your calculated daily wage based on your basic salary
• Breakdown: Separate calculations for the first 5 years and any additional years beyond 5

How This Calculator Works

Our gratuity calculator follows the exact methodology prescribed by the UAE Labour Law (Federal Decree-Law No. 33 of 2021, Article 51) and guidelines from the Ministry of Human Resources and Emiratisation (MOHRE). The calculation process is transparent, accurate, and compliant with current UAE regulations.

Calculation Methodology

Step 1: Calculate Service Duration

The calculator determines the total years of service by calculating the difference between your first working day and last working day. The duration is calculated in complete years plus any partial months. Partial years are included proportionally if you have completed at least one full year of service.

Step 2: Calculate Daily Wage

Your daily wage is computed by dividing your monthly basic salary by 30, following the standard UAE Labour Law formula. This daily rate becomes the basis for all subsequent gratuity calculations.

Step 3: Determine Gratuity for First 5 Years

For the first five years (or the total service duration if less than five years), the calculator multiplies your daily wage by 21 days for each year of service.

Step 4: Calculate Gratuity Beyond 5 Years

If your service exceeds five years, the calculator applies a higher rate of 30 days' salary for each additional year beyond the first five years.

Step 5: Apply Maximum Cap

The calculator automatically checks that your total gratuity does not exceed two years' worth of your basic salary, as mandated by UAE Labour Law. If the calculated amount exceeds this limit, the result is capped at the maximum allowed amount.

Step 6: Contract Type Adjustment (Unlimited Contracts Only)

For unlimited contracts where employees resign before completing 5 years, the calculator applies the appropriate reduction:

• Service between 1-5 years: Only one-third (33.33%) of calculated gratuity is payable
• Service of 5 years or more: Full gratuity is payable

Formula Accuracy and Compliance

The formulas used in this calculator are directly derived from:

• UAE Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations
• Article 51: End-of-Service Gratuity provisions
• Ministry of Human Resources and Emiratisation (MOHRE) official guidelines
• UAE official government portal (u.ae) regulations

Frequently Asked Questions