Free tool · UAE labour law 2021
UAE gratuity calculator
Work out an employee's end-of-service benefit in seconds. Enter the basic salary and the dates; the breakdown updates as you type. Free, no sign-up.
End-of-service gratuity
AED 38,010.43
7 years and 2 days of service (2,557 days)
- Daily basic wage (basic × 12 ÷ 365)
- AED 230.14
- First 5.00 years × 21 days
- AED 24,164.38
- Next 2.01 years × 30 days
- AED 13,846.05
- Total gratuity
- AED 38,010.43
With basic ÷ 30 instead: AED 38,538.36
A guide, not legal advice. Your contract, any deductions the law allows and the final settlement can change the amount. Check with the Ministry of Human Resources and Emiratisation (MOHRE) if in doubt.
21 days
of basic pay for each of the first five years
30 days
of basic pay for each year after five
2 years
of wage is the most gratuity can add up to
A worked example
A barber on a basic salary of AED 7,000 leaves after exactly seven years. Annualised, the daily basic wage is 7,000 × 12 ÷ 365 = AED 230.14. The first five years earn 5 × 21 × 230.14 = AED 24,164.38 and the next two years earn 2 × 30 × 230.14 = AED 13,808.22, so the gratuity is AED 37,972.60. Using the ÷ 30 shortcut instead gives AED 38,500.
For a small business, the hard part is not the formula. It is knowing what you owe everyone, every month, so the payout never comes as a surprise.
Substrate ERP
Know what every employee is owed, before they leave
Substrate's People module works out gratuity for anyone on your team for any date and builds the final settlement when someone leaves, right next to their visa and Emirates ID dates and your WPS payroll. Its AI drafts, you approve, and every change is logged.
- Gratuity and final settlement for any employee
- Visa and Emirates ID expiry alerts
- WPS salary file prepared for you
Questions owners ask
How is gratuity calculated in the UAE?
Turn the last monthly basic salary into a daily wage, then pay 21 days of that wage for each of the first five years of service and 30 days for each year after five. Part years count pro rata once the first full year is done.
Should the daily wage be basic ÷ 30 or basic × 12 ÷ 365?
Both are used. Annualising (basic × 12 ÷ 365) is the method courts and many payroll teams apply, and it is the default in Substrate. Dividing by 30 is a common shortcut that gives a slightly higher figure. The calculator shows both so you can see the difference.
When does an employee become eligible?
After one full year of continuous service with the same employer. Below one year no gratuity is due. Days of unpaid leave are not counted as service.
Does gratuity include allowances?
No. It is based on the basic wage only. Housing, transport and other allowances are left out, which is why the basic salary in the contract matters.
Is there a maximum?
Yes. The total cannot exceed two years' wage. The calculator applies this as 24 months of basic salary.
Does resigning reduce gratuity?
Not under Federal Decree-Law No. 33 of 2021. The cuts for resigning that applied under the old law no longer apply to private-sector contracts.
When must the employer pay it?
Within 14 days of the end of the contract, together with any other dues.
Does this work in free zones?
It follows the federal labour law used on the mainland and in most free zones. DIFC and ADGM run their own employment laws and end-of-service schemes, so use their rules there.