UAE End of Service Gratuity: Complete Calculation Rules under Labor Law 2026
UAE End of Service Gratuity: Labor Law Rules & Calculations
The UAE Labor Law (Federal Decree-Law No. 33 of 2021) governs the calculation of End of Service Benefits (EOSB) for all private sector employees across mainland UAE and free zones (with distinct rules in DIFC). The modern law unified all employment contracts into fixed-term contracts and standardized severance pay formulas for both resignation and termination.
Standard UAE Gratuity Formula (Article 51)
Under Article 51 of the UAE Labor Law, an employee is entitled to gratuity on completing one or more years of continuous service:
- First 5 Years of Service: 21 days of Basic Wage for each completed year of service.
- Years Exceeding 5 Years: 30 days of Basic Wage for each subsequent year of service.
- The total gratuity amount cannot exceed two years' basic wage.
- Gratuity is calculated strictly on the last drawn Basic Salary (excluding housing, transport, utility, and other allowances).
UAE Gratuity Entitlement Matrix (2026)
| Service Tenure | Resignation Entitlement | Termination by Employer |
|---|---|---|
| Less than 1 Year | 0 Days (Zero Gratuity) | 0 Days (Zero Gratuity) |
| 1 to 5 Years | 21 Days Basic Pay / Year | 21 Days Basic Pay / Year |
| More than 5 Years | 21 Days (Yr 1-5) + 30 Days (Yr 6+) | 21 Days (Yr 1-5) + 30 Days (Yr 6+) |
Settlement Deadline (Article 53)
The employer is legally obligated under Article 53 to pay all unpaid wages, accrued annual leave compensation, and end of service benefits to the worker within 14 days from the date of contract termination.
Frequently Asked Questions
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