UAE Gratuity Calculator 2025: Complete End of Service Guide

End of Service Gratuity (also called End of Service Benefits or ESB) is a lump sum payment calculated based on your basic salary and years of service. It's one of the most important financial benefits for employees in the UAE.

Key Points:

• Mandatory payment under UAE Labor Law
• Based on basic salary only (not total package)
• Calculated based on length of service
• Must be paid within 14 days of leaving
• Maximum cap of 2 years' total salary

To be eligible for gratuity, an employee must meet these requirements:

1. Complete at least 1 year of continuous service with the same employer
2. Be a full-time employee (part-time employees may have different arrangements)
3. Not be terminated under Article 44 (gross misconduct)

Who is NOT Eligible

• Employees with less than 1 year of service
• Employees dismissed for gross misconduct (Article 44 offenses)
• Employees during probation period (probation counts toward gratuity only if employment continues beyond probation)

Since February 2022, all new employment contracts must be fixed-term (limited) contracts. The calculation is straightforward:

For Service Up to 5 Years

Gratuity = (Basic Salary ÷ 30) × 21 × Years of Service

For Service Exceeding 5 Years

Gratuity = [(Basic Salary ÷ 30) × 21 × 5] + [(Basic Salary ÷ 30) × 30 × (Years - 5)]

Calculation Breakdown

Unlimited Contracts (Pre-2022 Resignation)

For employees who resign from unlimited contracts issued before February 2022:

Example 1: Limited Contract, 3 Years Service

Employee Details:

• Basic Salary: AED 10,000/month
• Service Period: 3 years
• Contract Type: Limited

Calculation:

Daily wage = 10,000 ÷ 30 = AED 333.33
Gratuity = 333.33 × 21 × 3 = AED 21,000

Example 2: Limited Contract, 7 Years Service

Employee Details:

• Basic Salary: AED 15,000/month
• Service Period: 7 years

Calculation:

Daily wage = 15,000 ÷ 30 = AED 500
First 5 years: 500 × 21 × 5 = AED 52,500
Remaining 2 years: 500 × 30 × 2 = AED 30,000
Total Gratuity = AED 82,500

Example 3: Unlimited Contract, Resignation After 2 Years

Employee Details:

• Basic Salary: AED 8,000/month
• Service Period: 2 years
• Termination: Employee resignation

Calculation:

Daily wage = 8,000 ÷ 30 = AED 266.67
Full gratuity = 266.67 × 21 × 2 = AED 11,200
Reduced gratuity (1/3) = AED 3,733

Gratuity is calculated ONLY on the basic salary component, not total compensation.

Included in Basic Salary

• Base salary as stated in contract
• Fixed basic wage

NOT Included

• Housing allowance
• Transportation allowance
• Food allowance
• Commission (unless contractually part of basic)
• Bonuses
• Overtime payments
• Air tickets
• Other benefits and allowances

Death of Employee

If an employee dies during employment:

• Full gratuity is payable to legal heirs
• No reduction applies regardless of service period
• Payment within 14 days of required documentation

Company Closure/Bankruptcy

• Gratuity remains a statutory obligation
• Employees have priority claim in liquidation proceedings
• Ministry of Human Resources may intervene

Article 44 Dismissal (Gross Misconduct)

Employee loses ALL gratuity if terminated for:

1. Assuming false identity or submitting forged documents
2. Committing an error causing substantial material loss
3. Violating safety instructions after written warning
4. Failing basic duties after written warning
5. Disclosing confidential information
6. Being intoxicated at work
7. Assaulting employer or colleagues
8. Absence without valid reason (20+ intermittent days or 7+ consecutive days)

Deadline

Employer must pay gratuity within 14 days of contract termination.

Non-Payment Penalties

• Employee can file complaint with MOHRE
• Employer may face fines
• MOHRE can enforce payment through legal channels
• Employee may be entitled to interest on delayed payments

Your Rights

1. Right to full statutory gratuity after 1 year
2. Right to receive payment within 14 days
3. Right to dispute calculation through MOHRE
4. Right to claim through labor court if unpaid

1. Including allowances: Only basic salary counts toward gratuity
2. Forgetting the cap: Maximum is 2 years' total salary
3. Miscounting service: Include full months; probation counts if employment continues
4. Wrong contract type: Know which calculation applies to your contract
5. Missing the deadline: Payment is due within 14 days
6. Not documenting: Keep records of salary and service dates

Employer Obligations

1. Calculate gratuity correctly based on contract type and service
2. Pay within 14 days of termination
3. Provide breakdown of calculation to employee
4. Cannot contractually waive or reduce statutory gratuity
5. May offer enhanced gratuity above statutory minimum