Gratuity Law: Article 51 of UAE Labour Law Gratuity Rules, Calculations & End-Of-Service Rights

UAE gratuity law entitles a foreign full-time private-sector employee who completes one or more years of continuous service to an end-of-service gratuity calculated on basic wage: 21 days’ wage for each of the first five years and 30 days’ wage for each year after that, capped at two years’ total wages.

AlRamsy Advocates & Legal Consultancy Gratuity Calculator

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

UAE gratuity law entitles a foreign full-time private-sector employee who completes one or more years of continuous service to an end-of-service gratuity calculated on basic wage: 21 days’ wage for each of the first five years and 30 days’ wage for each year after that, capped at two years’ total wages.

The rule sits in Article 51 of Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations, in force since 2 February 2022, and the employer must pay it, along with every other outstanding entitlement, within 14 days of the contract ending.

This guide applies to the private sector in the United Arab Emirates under federal law. DIFC and ADGM operate their own employment regimes and are covered separately below.

UAE Gratuity Rules Under Article 51 of the Labour Law

Article 51 of Federal Decree-Law No. 33 of 2021 provides that a foreign full-time worker who has completed one or more years of continuous service is entitled, on the end of service, to an end-of-service gratuity calculated on the basic wage as follows: the wage of 21 days for each year of the first five years of service, and the wage of 30 days for each year in excess of that. The article adds two limits that decide most disputes. The total gratuity may not exceed two years’ wages. And days of absence from work without pay are not counted in the duration of service.

Three things follow that people routinely get wrong.

The calculation runs on basic wage, not the salary you actually receive. Housing, transport, and other allowances are excluded, which is why a package of AED 20,000 with a basic of AED 10,000 produces gratuity on AED 10,000.

The entitlement is not conditional on why you left. The article grants the gratuity on completion of one year of continuous service and says nothing about resignation reducing it.

The two-year cap bites only on very long service. Using the 30-day monthly divisor, the 21 and 30 day tiers reach 24 months of basic wage after 25.5 years of service, not 24 years. The statutory ceiling is two years’ wages, so its application also depends on the wage used for the cap.

Who this applies to: foreign employees in the UAE private sector, on the mainland and in most free zones. UAE nationals, and GCC nationals covered by the applicable pension-extension arrangements, fall under pension and social-security rules rather than the ordinary foreign-worker formula.

Who Is Eligible for Gratuity in the UAE?

You are eligible if you are a foreign private-sector employee who has completed at least one year of continuous service with the same employer. Below one year there is no gratuity entitlement. Above one year, partial years are paid pro rata, so an employee leaving at three years and four months is paid for three years plus four months.

Situation	Gratuity position	Key considerations
Less than 1 year of service	Not entitled	Applies however the contract ends
1 year or more, full-time	Entitled under Article 51	Paid pro rata for the part-year
Probation period	Counted in continuous service	Counts once at least one year of continuous service is completed
Unpaid leave and unpaid absence	Excluded from the service period	Article 51 excludes these days expressly
Paid annual and sick leave	Counted in the service period	Do not let these be deducted as “absence”
Part-time or job-sharing	Entitled on a pro-rata basis	Calculated by contracted hours, see below
Temporary work models, or contracts under a year	Not entitled	Executive Regulation, Article 30(2)

Practical note: approved paid leave counts towards service and should not be treated as unpaid absence. Ask for the service period in writing, in days, before you sign anything.

How to Calculate Gratuity Under UAE Labour Law?

Take your last basic monthly wage, divide it by 30 to get a daily wage, multiply that daily wage by 21 for each of the first five years of service, then by 30 for every year beyond five, and add the two together. Apply the two-year cap only if the result exceeds 24 months of wages.

1. Confirm your basic wage. Read it off the payslip or the MOHRE contract, not the offer letter’s total package.
2. Work out the daily wage. Basic monthly wage divided by 30.
3. Establish the service period. From the start date to the last working day, minus any unpaid absence.
4. Apply the first tier. 21 days for each of the first five years, pro-rated for a partial year.
5. Apply the second tier. 30 days for each year after the fifth, pro-rated.
6. Check the cap. The total may not exceed two years’ wages.

Worked example, four years of service on AED 12,000 basic. Daily wage is 12,000 divided by 30, which is AED 400. Four years in the first tier gives 21 times 4, which is 84 days. Gratuity is 400 times 84, which is AED 33,600.

Worked example, nine years of service on AED 12,000 basic. The first five years give 21 times 5, which is 105 days. The remaining four years give 30 times 4, which is 120 days. Total 225 days, times AED 400, which is AED 90,000. Assuming total monthly wage is also AED 12,000, two years’ wages would be AED 288,000, so the cap does not apply.

Years of service	Gratuity in days of basic wage	On AED 10,000 basic
1 year	21 days	AED 7,000
2 years	42 days	AED 14,000
3 years	63 days	AED 21,000
5 years	105 days	AED 35,000
7 years	165 days	AED 55,000
10 years	255 days	AED 85,000

Practical note: run your own figure before your employer sends you theirs. Arriving at a settlement meeting with a number you can defend changes the conversation entirely.

Visit our Gratuity Calculator for More Accurate Results: Click Here

UAE Gratuity Rules After Resignation

No. Under Federal Decree-Law No. 33 of 2021 an employee who resigns after one or more years of continuous service receives the same gratuity as one whose contract is terminated by the employer. The old rules that cut a resigning employee’s entitlement to one third or two thirds depending on length of service belonged to Federal Law No. 8 of 1980, which was repealed when the current law took effect on 2 February 2022. The one-third rule does not govern an exit under the current federal law; historical disputes may require the earlier law.

Two related points that are still live.

Notice period. Resigning without serving the notice in your contract does not forfeit your gratuity, but the employer may claim compensation in lieu of notice, which is commonly set against the final settlement. Our guide to the notice period under UAE labour law sets out the periods and how they are calculated.

Contract type. The current law replaced unlimited contracts with fixed-term contracts, so the old limited versus unlimited distinction no longer changes the gratuity formula, although it still appears in older employment paperwork. See limited versus unlimited contracts in the UAE for where the distinction still matters.

Who this applies to: any employee weighing up whether to resign before an anniversary. Since the tier changes at five years, resigning shortly before the fifth anniversary costs you the higher 30-day rate on the years that follow, not the gratuity you have already accrued.

Can an Employer Refuse to Pay Gratuity for Misconduct?

Article 51 grants the gratuity on completion of one year of continuous service and does not make it conditional on the reason for dismissal. Dismissal for one of the grounds in Article 44 ends the contract without notice, but it does not automatically extinguish an accrued gratuity in the way the repealed 1980 law allowed.

What an employer may legitimately do is deduct amounts due under the law or a court judgment, subject to Article 29 of Cabinet Resolution No. 1 of 2022. Notice compensation, loans and property-related deductions require a lawful basis and compliance with the applicable conditions; itemising a charge alone does not make it deductible.

When to speak to a lawyer: if a settlement offer shows gratuity as zero, or shows deductions you do not recognise, take advice before signing. A signed receipt or settlement can create evidential difficulties, although waivers contrary to statutory worker rights are void under Article 65. Our labour and employment lawyers review settlement statements against payroll evidence.

Gratuity for Part-Time, Flexible and Domestic Workers

Part-time and job-sharing employees receive a proportion of the full-time gratuity. Article 30 of Cabinet Resolution No. 1 of 2022, the Executive Regulation of the labour law, sets the calculation as the annual working hours in the employment contract divided by the annual working hours under a full-time contract, multiplied by 100, with the resulting percentage applied to the full-time end-of-service entitlement. The same article provides that end-of-service pay does not apply to temporary work models or to contracts of less than one year.

Domestic workers are not covered by Federal Decree-Law No. 33 of 2021. They fall under Federal Decree-Law No. 9 of 2022 concerning Domestic Workers, as amended. Article 22 authorises Cabinet rules for calculating and paying gratuity but does not itself set a formula. Article 51’s 21/30-day formula therefore does not apply; any entitlement must be assessed under applicable domestic-worker rules, the contract and any preserved rights from earlier service.

Who this applies to: anyone on a part-time permit, a flexible work contract, a freelance arrangement, or a domestic worker visa. An independent freelancer is not automatically an employee entitled to gratuity. Check which law governs your contract before applying any calculator, including ours.

Gratuity Rules in UAE Free Zones, DIFC and ADGM

Federal gratuity law applies on the mainland and in most free zones, but the two financial free zones run their own employment regimes and their own end-of-service systems.

Jurisdiction	What applies	Key considerations
Mainland UAE	Article 51 of Federal Decree-Law No. 33 of 2021	MOHRE supervises; the standard 21 and 30 day tiers apply
Most free zones (DMCC, JAFZA and similar)	The federal law	The free zone authority administers, the entitlement is the same
DIFC	DIFC Employment Law and the DEWS workplace savings plan	Qualifying-scheme contributions generally apply from 1 February 2020; preserved earlier gratuity and exemptions may apply
ADGM	ADGM Employment Regulations 2024, effective 1 April 2025	Section 61 retains gratuity after one year: 21 days per year for the first five years, then 30 days. The daily rate uses annual basic wage / 365, with a 50% annual-wage floor. An offered pension or savings alternative requires the employee’s written choice.

Practical note: applying an Article 51 calculator to a DIFC contract does not establish your DIFC entitlement. Check the jurisdiction named in your contract first. Our guide to DIFC employment law explains how the DIFC regime differs.

The UAE Alternative End-of-Service Benefits Savings Scheme

Since 1 November 2023, employers have been able to replace the accrued gratuity system with a funded savings scheme under Cabinet Resolution No. 96 of 2023. Participation is voluntary for the employer, but once an employee is enrolled, contributions replace the accrual of gratuity from that date forward.

The employer pays a monthly contribution into an accredited investment fund of 5.83% of the employee’s basic salary for employees with up to five years of service, and 8.33% for employees with more than five years. Employees may make voluntary additional contributions. Gratuity accrued before enrolment is preserved: it is calculated as at the enrolment date on the basic salary at that date, and remains payable by the employer. Financial free-zone authorities regulate arrangements within their own jurisdictions; DIFC and ADGM rules must be checked separately.

Who this applies to: employees whose employer has enrolled them in the scheme. If you are enrolled, your end-of-service payment is the preserved gratuity up to the enrolment date, plus whatever has accumulated in your fund account since.

Practical note: ask your employer in writing for the enrolment date and the preserved gratuity figure calculated at that date. That figure is the one to check against Article 51, and it becomes difficult to reconstruct years later.

UAE Labour Law: Final Settlement and Gratuity Payment Deadline

Article 53 of Federal Decree-Law No. 33 of 2021 requires the employer to pay the worker’s wages and all other entitlements within 14 days of the date the contract ends. That deadline covers the whole final settlement, not the gratuity alone.

A UAE final settlement normally contains:

• End-of-service gratuity under Article 51
• Unpaid basic salary and allowances up to the last working day
• Payment for accrued but untaken annual leave calculated on basic wage under Article 29(9)
• Any payment in lieu of notice owed by whichever party did not serve it
• Repatriation or air ticket costs where the contract or the law provides for them
• Less any documented and itemised deductions

Practical note: visa cancellation and the final payment are separate processes. Do not accept “we will pay after cancellation” as a reason to miss the 14-day deadline, and keep a dated record of when you were asked to sign anything.

How to Claim Unpaid Gratuity in the UAE?

Start with a written demand, then file with MOHRE if it is not met. Under the amendments introduced by Federal Decree-Law No. 20 of 2023, MOHRE issues binding decisions on labour disputes valued up to AED 50,000; other unresolved larger claims are referred to the competent court, except disputes about non-compliance with a Ministry-approved settlement, which MOHRE may decide regardless of value. Federal Decree-Law No. 9 of 2024 extended the limitation period for employment claims from one year to two years from the end of the employment relationship, so a claim left for longer than two years is likely to be time-barred.

1. Send a written demand. Set out the start and end dates, the basic wage, the service period in years and days, and your calculation. Give a short deadline and keep proof of delivery.
2. Gather the evidence. Employment contract and any amendments, payslips showing the basic wage, WPS or bank records, proof of start and end dates, leave records distinguishing paid from unpaid, and the settlement statement you were offered.
3. File a complaint with MOHRE. Through the MOHRE website or app. The Ministry attempts settlement first. Filing this MOHRE complaint is free. Worker or heir claims not exceeding AED 100,000 are exempt from judicial fees under Article 55; professional representation and translation costs are separate. Free-zone employees should use the route required by their authority.
4. Receive the decision or the referral. MOHRE may issue an enforceable decision for claims up to AED 50,000 and disputes over non-compliance with a Ministry-approved settlement regardless of value. Either party has 15 working days from notification to challenge it before the competent Court of First Instance; filing suspends enforcement, and the court’s judgment is final. Other unresolved claims go to court.
5. Take advice before the court stage. Deductions, contested termination and disputed wage structures are where cases are won or lost on documents.

Our step-by-step guide to filing a MOHRE labour complaint covers the process and the document checklist, and the same route applies to an unpaid salary complaint.

When to speak to a lawyer: before you sign a full and final settlement, if your employer disputes the basic wage or the service period, or if the claim is above AED 50,000 and heading to court. Al Ramsy Advocates acts for both employees and employers in end-of-service disputes across the UAE.

UAE Gratuity Law: Frequently Asked Questions