# What is End-of-service gratuity?

End-of-service gratuity is the lump sum a UAE employer owes an employee with at least one year of continuous service, calculated on basic salary under Federal Decree-Law No. 33 of 2021.

## End-of-service gratuity explained

Under Federal Decree-Law No. 33 of 2021, an employee who completes one year of continuous service is entitled to 21 days' basic salary for each of the first five years, and 30 days' basic salary for each year thereafter. Total gratuity is capped at two years' pay.

The calculation runs on basic salary only — housing, transport and other allowances are excluded — which is why the split between basic and allowances in the employment contract materially changes the final figure.

Gratuity is the most frequently disputed line in a UAE final settlement. An HR system that shows the calculation basis, not just the result, removes most of that friction.

Free zone regimes can differ. DIFC replaced gratuity with the DEWS funded workplace savings scheme for most employees.

## How NeuralHR.AI handles End-of-service gratuity

- [UAE gratuity calculator](https://neuralhr.ai/en/resources/guides/gratuity-calculator)

## Related terms

- [UAE Labour Law](https://neuralhr.ai/en/hr-glossary/uae-labour-law): Federal Decree-Law No. 33 of 2021 is the UAE's private-sector employment law, governing contracts, working hours, leave, termination and end-of-service entitlements.
- [DEWS](https://neuralhr.ai/en/hr-glossary/dews): DEWS is the funded workplace savings scheme that replaced end-of-service gratuity for most DIFC employees, requiring monthly employer contributions to a regulated trust.
- [Final settlement](https://neuralhr.ai/en/hr-glossary/final-settlement): A final settlement is the closing payment made to a departing employee, combining outstanding salary, unused leave, end-of-service gratuity and any contractual dues, less lawful deductions.

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Canonical page: https://neuralhr.ai/en/hr-glossary/gratuity
Last verified: 2026-08-01

Published by NeuralHR.AI — AI-native HR and payroll platform for the UAE, Saudi Arabia and India.