The statutory gratuity calculation formula under Article 51
Under Federal Decree-Law No. 33 of 2021 (the UAE Labour Law), foreign full-time employees in the private sector who complete at least one year of continuous service are entitled to end-of-service gratuity upon contract termination.
The statutory formula divides your service duration into two distinct tiers:
1. First 5 years of service: 21 days' basic salary for each completed year (calculated as (Basic Monthly Salary ÷ 30) × 21 × Years).
2. Years beyond 5 years: 30 days' basic salary for each additional year (calculated as (Basic Monthly Salary ÷ 30) × 30 × Years). You can calculate your exact payout instantly with our interactive UAE End-of-Service Gratuity Calculator (/tools/uae-gratuity-calculator).
Why only the basic wage counts (and allowances are excluded)
A crucial feature of UAE employment law is that end-of-service gratuity is calculated strictly on your last drawn basic wage, as stated in your official MOHRE employment contract. Allowances—such as housing allowance, transportation, mobile allowances, commissions, bonuses, utilities, or furniture—are expressly excluded under Article 51(2).
For example, if your total monthly salary is AED 15,000 but your contract specifies AED 9,000 basic salary and AED 6,000 allowances, your daily rate is AED 300 (AED 9,000 ÷ 30), not AED 500. Always check your registered MOHRE contract to confirm your exact basic wage before verifying your settlement offer.
Statutory two-year cap, unpaid leave deductions and partial years
Three statutory provisions govern how final service durations are adjusted:
Partial years: Once you complete your first continuous year, any additional fractional year (months and days) is paid on a pro-rata basis.
Unpaid absence deduction: Under Article 51(4), days of unpaid leave (leave without pay) are strictly excluded from your total length of service.
Two-year wage ceiling: Article 51(7) mandates that total end-of-service gratuity cannot exceed two years' total salary (24 months' gross wage). Even for employees with 25 or 30 years of continuous service, the statutory payout stops at this statutory maximum limit.
Employer payment deadline: the 14-day rule under Article 53
Under Article 53 of the UAE Labour Law, the employer is legally obligated to settle all outstanding wages, accrued untaken annual leave, and end-of-service gratuity within exactly 14 days from the date of contract termination or cancellation.
Do not sign a final settlement receipt or visa cancellation waiver stating that you have received all financial dues until the funds have cleared into your UAE bank account or a verified cheque has been cashed. Once you sign a waiver, proving an unpaid balance in court becomes significantly more difficult.
The voluntary Alternative Savings Scheme (Cabinet Resolution No. 96 of 2023)
To protect employee savings against inflation and employer insolvency, the UAE introduced a voluntary defined-contribution Alternative End-of-Service Benefits Scheme (known as the Savings Scheme) under Cabinet Resolution No. 96 of 2023.
If an employer enrolls in the scheme through MOHRE, they transfer monthly contributions into a licensed investment fund (approved by the Securities and Commodities Authority) instead of paying a lump sum at the end of employment: 5.83% of basic monthly salary for workers with under 5 years of service, and 8.33% for workers with over 5 years of service. Employees retain their legacy accrued gratuity up to the date of enrollment, and their invested funds grow tax-efficiently with capital-guarantee or Sharia-compliant investment tracks.
Resolving final settlement disputes through MOHRE (80060)
If an employer delays your final settlement beyond 14 days, withholds gratuity, or makes unauthorized deductions, follow this official dispute process:
1. Contact MOHRE: Call the toll-free call center at 80060, use the MOHRE mobile application, or visit a Tawseel service center to lodge an official labour complaint.
2. Amicable mediation: MOHRE labour advisors will contact both parties within a few business days to mediate an amicable settlement.
3. Binding administrative decisions up to AED 50,000: For claims valued at AED 50,000 or less, MOHRE has the statutory legal power to issue a final, binding executive decision without transferring the case to court. Either party can appeal the decision to the Court of Appeal within 15 working days.
4. Labour Court referral: For claims exceeding AED 50,000 where mediation fails, MOHRE refers the case to the competent UAE Labour Court. Workers are exempt from court fees on claims up to AED 100,000.