UAE Gratuity Calculator
Estimate your End-of-Service Benefits (EOSB) in the UAE
Note: As of Dec 2023, unlimited contracts are being converted to limited contracts by law.
Understanding Gratuity (End-of-Service Benefits) in UAE
Gratuity, also known as End-of-Service Benefit (EOSB), is a mandatory payment employers in the UAE owe to their employees upon the end of their service period, provided they meet certain criteria (like completing at least one year of continuous service). It serves as a token of appreciation for the employee's contribution and loyalty. This calculator helps estimate this amount based on the UAE Labour Law (Federal Decree-Law No. 33 of 2021).
How Gratuity is Calculated in UAE (Limited Contracts)
For employees under **Limited (Fixed-Term) Contracts**, the calculation is based on the last drawn basic salary:
- **1 to 5 years of service:** Gratuity = (Basic Salary / 30) * 21 * Number of Years Served. You receive 21 days' basic salary for each year of the first five years.
- **More than 5 years of service:** Gratuity = [(Basic Salary / 30) * 21 * 5] + [(Basic Salary / 30) * 30 * (Total Years Served - 5)]. You receive 21 days' basic salary for each of the first five years, and 30 days' basic salary for each subsequent year.
Note: The reason for leaving (resignation, termination, end of contract) generally does not reduce the gratuity entitlement under the latest Labour Law for limited contracts, assuming the minimum service period is met.
Gratuity Calculation for Unlimited Contracts (Phasing Out)
While **Unlimited Contracts** are being phased out (employers were required to transition them to limited contracts), the historical calculation method differed based on the reason for leaving:
- **Termination by Employer:** Calculated the same way as limited contracts (21 days/year for first 5 years, 30 days/year after).
- **Resignation by Employee:**
- Less than 1 year: No gratuity.
- 1 to 3 years: One-third (1/3) of the 21 days' basic salary per year.
- 3 to 5 years: Two-thirds (2/3) of the 21 days' basic salary per year.
- More than 5 years: Full gratuity entitlement (21 days/year for first 5, 30 days/year after).
Our calculator reflects these rules. Remember that unlimited contracts must be converted.
Key Eligibility Points
- Applies mainly to expatriate employees in the private sector.
- Minimum of one year of continuous service is required.
- Calculation is based on the **last drawn basic salary** (excluding allowances).
- Total gratuity amount cannot exceed the equivalent of two years' total salary.
- Payment is due within 14 days of the employment end date.
Disclaimer
This calculator provides an estimate based on standard interpretations of the UAE Labour Law. It does not account for specific contract clauses, unpaid leave deductions, free zone variations (e.g., DIFC's DEWS scheme), or potential legal changes. Always verify with your HR department or seek legal advice for official calculations.
Frequently Asked Questions (FAQ)
Gratuity/EOSB is a statutory payment made by an employer to an employee at the end of their service period in the UAE. It's mandated by the UAE Labour Law as a form of recognition for the employee's service, provided they have completed at least one continuous year with the company.
Primarily, expatriate employees working in the UAE's private sector who complete at least one year of continuous service are eligible. UAE nationals traditionally had pension schemes, but recent voluntary schemes allow them to opt into end-of-service benefits too. Certain exclusions might apply based on employment type or specific free zone regulations.
Gratuity is calculated based *only* on the employee's last drawn **basic salary**. Allowances such as housing, transport, or other benefits are *not* included in the gratuity calculation.
An employee must complete a minimum of **one full year** of continuous service with the employer to be eligible for any gratuity payment.
Historically, under Unlimited contracts, resigning significantly reduced gratuity entitlement in the early years (1-5 years). Under Limited contracts (and the current legal framework pushing towards them), the entitlement calculation (21 days for years 1-5, 30 days thereafter) generally applies regardless of whether the employee resigns or is terminated, provided minimum service is met. Note: Unlimited contracts are legally required to be converted to Limited contracts.
Yes, the total gratuity payable to an employee under the UAE Labour Law cannot exceed the amount equivalent to **two years' (24 months) total salary** (calculated based on the last drawn salary).
The employer must pay the gratuity along with all other final settlement dues within **14 days** from the employee's last working day (end date of the employment contract).
Yes, some free zones have different regulations. For example, the Dubai International Financial Centre (DIFC) uses the 'DIFC Employee Workplace Savings' (DEWS) plan, where employers make monthly contributions to a savings plan instead of a lump-sum gratuity payment at the end of service. Always check the specific regulations of the free zone you work in.
Yes, under specific circumstances outlined in the Labour Law, an employer may deduct amounts owed by the employee to the employer (e.g., outstanding loans, damages caused by the employee) from the final settlement, including the gratuity amount. However, these deductions must be legally justifiable.
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