End-of-Service Gratuity Calculation in the UAE (2025 Updated Guide)

If you work in the United Arab Emirates, your end-of-service gratuity is a valuable financial entitlement — a lump-sum payment you receive when your employment contract ends.

Whether you’re an expatriate or UAE national, it’s essential to understand how gratuity is calculated, what conditions apply, and how the latest 2025 labour law updates affect your rights.

This guide explains everything you need to know about gratuity in the UAE, including the official calculation method, eligibility criteria, and practical examples.

For help reviewing your employment contract or final settlement documents, visit Labeeb Writing & Designs Expert Career Support.

What Is End-of-Service Gratuity in the UAE?

End-of-service gratuity is a mandatory payment provided to employees after completing at least one year of continuous service with an employer.

It is designed to reward long-term service and provide financial stability after employment ends.

The gratuity amount depends on:

• Your basic salary (excluding allowances and bonuses).
• Your length of service.
• Whether your contract was limited or unlimited.
• The reason for termination or resignation.

Gratuity is calculated based on the UAE Federal Decree-Law No. 33 of 2021 and its executive regulations.

Eligibility for Gratuity

To qualify for end-of-service gratuity in the UAE:

1. You must have completed at least one year of continuous service.
2. You must not have been dismissed for disciplinary reasons under Article 44.
3. You must have a valid employment contract registered under the UAE Labour Law.

Employees on both limited-term and unlimited-term contracts are eligible under the updated 2025 provisions.

How Gratuity Is Calculated (Private Sector – 2025 Rules)

Gratuity is calculated only on the basic salary, excluding allowances, bonuses, and commissions.

Here’s the standard calculation formula:

• For the first 5 years of service: 21 days of basic salary for each year.
• For each additional year beyond 5 years: 30 days of basic salary per year.

The total gratuity cannot exceed the equivalent of two years’ total salary as per UAE labour law.

Example:
If your basic salary is AED 10,000 and you worked for 7 years:

• First 5 years = 5 × (21/30 × 10,000) = AED 35,000
• Next 2 years = 2 × (30/30 × 10,000) = AED 20,000
  Total gratuity = AED 55,000

Gratuity for Resignation Cases

Employees who resign voluntarily are still entitled to gratuity, depending on their service duration.

Under the updated 2025 law:

• Resigned employees with 1–5 years of service receive full gratuity (no reduction).
• Those with 5+ years receive the same as terminated employees.

This change replaced older rules that reduced gratuity for voluntary resignations, making the system fairer and more consistent.

Gratuity for Limited vs. Unlimited Contracts

The 2025 UAE labour law unified contract types, meaning gratuity is now calculated similarly for both limited and unlimited contracts.

However, for contracts signed before the 2022 labour reform, the previous structure may still apply until renewal.

If unsure about your contract type or legal rights, consult Labeeb’s Employment Review Services.

Partial Year Calculation

If you worked less than a full year beyond your last completed year, gratuity is calculated on a pro-rata basis.

For example:
If your annual gratuity entitlement is AED 15,000 and you worked 3 extra months, you receive:
AED 15,000 × (3/12) = AED 3,750

Deductions and Forfeitures

Your employer cannot deduct gratuity except in specific cases:

• If you were dismissed for gross misconduct (Article 44).
• If you owe the company money and have a court-approved deduction order.

Otherwise, gratuity is your legal right and must be paid within 14 days of your final working day, as per Article 53 of the Labour Law.

Gratuity for Domestic and Government Workers

• Domestic workers (e.g., drivers, housekeepers) are covered under separate laws but still entitled to gratuity after one year of service.
• Government employees may receive pension or lump-sum benefits through the General Pension & Social Security Authority (GPSSA) instead of traditional gratuity.

You can verify these details at https://www.mohre.gov.ae/ or https://www.gpssa.gov.ae/.

Tax and Currency Considerations

The UAE does not impose income tax, meaning your gratuity is tax-free.

If you’re relocating, you may transfer it to your home country in AED or convert it through your bank. Always check transfer fees and exchange rates beforehand.

How to Claim Your Gratuity

1. Check your final settlement letter from HR.
2. Ensure your basic salary and service duration are correctly recorded.
3. Request payment confirmation in writing.
4. If delayed beyond 14 days, file a complaint through the Ministry of Human Resources and Emiratisation (MOHRE).

MOHRE provides a helpline (800-60) and an online complaint system for employee disputes.

Tips to Maximize Your Gratuity Benefits

1. Keep copies of your contracts and pay slips for reference.
2. Confirm that your basic salary is clearly stated in your contract.
3. Avoid unapproved absences or disciplinary actions that could affect entitlement.
4. Renew or transfer visas and employment files correctly to maintain continuous service.
5. Get professional help reviewing your final settlement if numbers seem unclear.

For detailed verification, reach out to Labeeb’s Career and Employment Advisory.

How Labeeb Writing & Designs Supports UAE Professionals

At Labeeb Writing & Designs, we empower UAE professionals and expatriates to manage every stage of their employment lifecycle — from joining to resignation or end-of-service.

Our services include:

• Professional CV Writing for UAE Employers
• ATS Resume Optimization for Dubai Jobs
• Cover Letter Writing for UAE Careers
• LinkedIn Profile Enhancement
• Interview & Offer Coaching
• Career Support & Legal Employment Guidance

We ensure you understand your entitlements, protect your financial rights, and transition smoothly at every stage of your UAE career.

Conclusion

The end-of-service gratuity system in the UAE is one of the region’s most employee-friendly benefits, ensuring financial security after years of dedicated service.

By understanding how it’s calculated, staying compliant with your contract, and monitoring your payroll records, you can confidently claim what you’re owed.

Secure your financial future and professional rights with Labeeb Writing & Designs — your trusted UAE partner for career documentation, employment review, and labour law guidance.

FAQs

1. Who is eligible for end-of-service gratuity in the UAE?
All private-sector employees who have completed one or more years of continuous service.

2. How long does it take to receive gratuity?
Employers must pay within 14 days of contract termination.

3. Is gratuity calculated on total salary or basic salary?
Only the basic salary is used for gratuity calculation.

4. Can an employer withhold gratuity?
Only in limited cases of proven misconduct or legal deductions.

Arabic Summary (خلاصة بالعربية)

تمنح قوانين العمل الإماراتية لعام 2025 الموظفين حق الحصول على مكافأة نهاية الخدمة بعد سنة واحدة من العمل المتواصل. يتم احتسابها بناءً على الراتب الأساسي ومدة الخدمة، حيث تُمنح 21 يومًا عن كل سنة من السنوات الخمس الأولى و30 يومًا عن كل سنة إضافية. يجب على صاحب العمل دفع المكافأة خلال 14 يومًا من انتهاء العقد. يقدم Labeeb.ae خدمات احترافية لمراجعة العقود وتسوية المستحقات وضمان حقوقك المالية في دولة الإمارات.