Comparisons
GCC Gratuity Comparison: End of Service Benefits 2025
Compare gratuity and end of service benefits across UAE, Saudi Arabia, Qatar, Kuwait, Oman, and Bahrain. Calculation formulas, eligibility, caps, and resignation impact.
Published: January 23, 2026
16 min read read
8 topics covered
Quick Summary: Compare gratuity and end of service benefits across UAE, Saudi Arabia, Qatar, Kuwait, Oman, and Bahrain. Calculation formulas, eligibility, caps, and resignation impact.
End of service gratuity (ESG) is a lump-sum payment made to employees upon termination of employment across all GCC countries. Without pension systems for expatriates, gratuity serves as the primary end-of-service benefit. Understanding the differences is essential for employers operating across the region and employees planning their finances.
| Aspect | Details |
|---|---|
| UAE | 21/30 days, 2yr cap, 1yr minimum |
| Saudi Arabia | 15/30 days, no cap, 2yr minimum |
| Qatar | 21/30 days, no cap, 1yr minimum |
| Kuwait | 15/30 days, 1.5yr cap, 3yr minimum |
| Oman | 15 days, no cap, 1yr minimum |
| Bahrain | 15 days, no cap, 1yr minimum |
Understanding Gratuity in the GCC
Gratuity is a legal requirement across all GCC countries, though calculation methods and conditions vary significantly.
Why Gratuity Matters
Gratuity represents a major employment benefit for expatriates, a significant liability for employers, a legal requirement (not optional), and affects hiring and retention strategies across the region.
Key Variables
When comparing gratuity across GCC countries, consider minimum service requirements, calculation base (basic only vs total salary), days per year of service, maximum caps, and resignation reduction policies.
UAE Gratuity
UAE gratuity is governed by Federal Decree-Law No. 33 of 2021 with specific calculation rules.
UAE Calculation Formula
For the first 5 years: 21 calendar days per year of service. After 5 years: 30 calendar days per year. Calculation is based on basic salary only - housing, transport, and all allowances are excluded.
UAE Key Features
Eligibility requires minimum 1 year of continuous service. Maximum cap is 2 years' total salary. Payment must be made within 14 days of termination. Gratuity is not taxable. With fixed-term contracts (mandatory since 2022), there is no resignation reduction.
| UAE Feature | Details |
|---|---|
| Minimum Service | 1 year continuous |
| First 5 Years | 21 days/year |
| After 5 Years | 30 days/year |
| Calculation Base | Basic salary only |
| Maximum Cap | 2 years' salary |
| Resignation Impact | None for fixed-term |
Saudi Arabia Gratuity
Saudi Arabia's gratuity system under Royal Decree M/51 has distinct features including resignation penalties.
Saudi Calculation Formula
For the first 5 years: 15 calendar days per year. After 5 years: 30 calendar days per year. Importantly, calculation base includes basic salary plus fixed allowances - not just basic.
Saudi Resignation Reduction
Unlike UAE, Saudi applies significant resignation penalties: 2-5 years service receives only 1/3 of gratuity, 5-10 years receives 2/3, and 10+ years receives full gratuity. This strongly incentivizes long-term employment.
Saudi Key Features
Minimum 2 years service required (highest in GCC). No maximum cap. Payment due within 1 week. Saudi nationals are covered by GOSI pension, which may offset gratuity obligations.
| Saudi Feature | Details |
|---|---|
| Minimum Service | 2 years |
| First 5 Years | 15 days/year |
| After 5 Years | 30 days/year |
| Calculation Base | Basic + fixed allowances |
| Maximum Cap | None |
| Resignation 5-10yr | 67% received |
Qatar, Kuwait, Oman, and Bahrain
The remaining GCC countries each have unique gratuity provisions.
Qatar
Similar to UAE with 21 days for first 5 years and 30 days thereafter. Based on basic salary. Minimum 1 year service. No cap. No resignation reduction after 1 year. Payment within 7 days of termination.
Kuwait
Requires 3 years minimum service (unique in GCC). 15 days for first 5 years, 30 days after. Cap of 1.5 years' salary. Significant resignation reduction: 50% for 3-5 years, 75% for 5-10 years, 100% only after 10 years.
Oman
Uses 15 days per year for all service periods (some interpretations apply 30 days after 5 years). Based on basic salary. Minimum 1 year. No cap. No resignation reduction. Omani nationals covered by PASI social security.
Bahrain
15 days per year (half-month) for all service. Based on total wage including regular allowances. Minimum 1 year. No cap. Unique in having mandatory social insurance for expats (employer 3%, employee 1%).
Comparison Tables
Side-by-side comparison of key gratuity features across all GCC countries.
Calculation Base Comparison
What's included in the calculation varies significantly. UAE and Qatar use basic salary only. Saudi and Bahrain include fixed allowances. Kuwait uses full remuneration. This can result in substantial differences in final amounts.
Resignation Impact
UAE, Qatar, and Oman pay full gratuity regardless of resignation. Saudi and Kuwait have sliding scales that significantly reduce payouts for early resigners. Bahrain varies but typically pays full after reasonable service.
| Country | Min Service | First 5yr | After 5yr | Cap |
|---|---|---|---|---|
| UAE | 1 year | 21 days | 30 days | 2 years' salary |
| Saudi Arabia | 2 years | 15 days | 30 days | None |
| Qatar | 1 year | 21 days | 30 days | None |
| Kuwait | 3 years | 15 days | 30 days | 1.5 years' salary |
| Oman | 1 year | 15 days | 15 days* | None |
| Bahrain | 1 year | 15 days | 15 days | None |
Employer Considerations
Practical guidance for employers managing gratuity liabilities across the GCC.
Provisioning Approaches
Options include monthly accrual (book monthly liability), annual provision (year-end calculation), actuarial valuation (IAS 19 for large companies), or cash reserve (set aside dedicated funds).
Multi-Country Operations
When operating across GCC: track by jurisdiction since different rules apply, understand different calculation bases, consider resignation policies in compensation strategy, be aware of caps in UAE and Kuwait, and calculate in local currency.
Special Situations
Death of employee: full gratuity paid to heirs in all countries. Termination for cause: may forfeit gratuity under misconduct provisions. Contract expiry (fixed-term): generally treated as employer-initiated with full gratuity.
Frequently Asked Questions
Multi-Country Gratuity Management
NeuralHR calculates gratuity accurately for UAE, Saudi Arabia, and other GCC countries.
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Our team of HR professionals and legal experts specializes in UAE labor law compliance, with extensive experience helping businesses navigate MOHRE regulations, Emiratisation requirements, and workforce management in the UAE and GCC region.
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