UAE gratuity calculator

Article 51 of the Labour Law gives a full-time foreign worker who has completed at least one year of continuous service a gratuity worked out on their last basic wage: 21 days’ wage for each of the first five years of service, and 30 days’ wage for each year after that. Part of a year counts in proportion to the time worked, once the first full year is complete. Days of unpaid absence are not counted as service.

The total may not exceed two years’ wage. The calculator applies that cap to the basic wage, the wage the gratuity itself is calculated on. The employer pays the gratuity, with the rest of what is owed, within 14 days of the end of the contract.

For example, on a monthly basic wage of AED 10,000 with exactly seven years of service, the gratuity is 21 × 5 + 30 × 2 = 165 days’ wage. At annual basic ÷ 365, a day’s wage is AED 328.77, so the gratuity is AED 54,246.58. This example is ours, worked to show the method.

Gratuity is calculated on the basic wage in the employment contract, not on the full wage. Housing, transport and other allowances are left out. That is why the basic wage written into an offer letter matters long after the first payslip.

The Labour Law says a year has 365 days and a month 30, but not how a monthly basic wage becomes a day’s wage for the gratuity. Employers use one of two methods: the annual basic wage divided by 365, or the monthly basic wage divided by 30. The second gives about 1.4% more.

Deloitte’s published example uses the first: an employee with 15 years of service and an annual basic salary of AED 250,000 receives AED 277,397, which is AED 250,000 ÷ 365 × 405 days. The calculator starts on that method and lets you switch. Use whichever your contract, policy or MOHRE calculation applies, and apply it the same way to everyone.

Under the current law the gratuity does not depend on who ended the contract: the article sets no reduction for an employee who resigns. A part-time or job-sharing worker receives the full-time gratuity multiplied by their contract hours as a share of full-time hours, under Article 30 of the Executive Regulations; enter that share in the calculator.

Emirati employees are not covered by this calculation: they receive their end-of-service benefit under the pensions law. Employers may instead join the voluntary savings scheme approved by Cabinet Resolution No. 96 of 2023, paying monthly contributions into an approved fund in place of the gratuity. The Labour Law does not apply in the Dubai International Financial Centre, which has its own scheme.

The employer may deduct amounts the worker owes under the law or a court judgment, and the contract may promise more than the law. The calculator shows the statutory gratuity only. A leaver’s full settlement also includes salary to the last day, leave not taken and notice; the final settlement calculator adds those lines.

In Orbiz payroll, Ledgr, a final settlement collects the salary to the last working day, leave, notice, loan balances and tax; a gratuity worked out like this is added to it as a payment line. Ledgr does not calculate UAE gratuity itself.