How to calculate end of service gratuity in the private sector

Who is entitled

The UAE government portal and the Ministry of Human Resources and Emiratisation (MOHRE) publish these conditions:

• A full time foreign worker who has completed one year or more of continuous service.
• Nothing is due for service under one year, or for temporary work under one year.
• Days of unpaid absence do not count towards the service period.
• UAE nationals follow the pension and social security legislation instead.

For the exact rules, MOHRE refers to Decree Law No. 33 of 2021 and its executive regulations.

How it is calculated

The official pages give the entitlement in days of wage. They do not say how a daily wage is worked out, or whether the two year cap is measured on basic or total wage, so the example below stays in days. The calculator on The Founder turns your contract details into a dirham figure.

A worked example in days

An employee served 6 years and 6 months. The example shows the method in days of basic wage:

1. The first five years: 5 × 21 = 105 days.
2. The next year and a half: 1.5 × 30 = 45 days.
3. The total: 105 + 45 = 150 days of basic wage.

A simpler second example: 3 full years give 3 × 21 = 63 days of basic wage. Allowances such as housing and transport do not enter the calculation.

Special cases

These cases change the calculation, according to MOHRE:

• Part time or job sharing work: the gratuity is multiplied by the ratio of contracted annual hours to full time annual hours.
• Unpaid absence: those days are left out of the service period.
• Part years: counted in proportion, but only after one full year of continuous service.

Payment and the Savings Scheme

What the official pages say about payment:

• The employer pays outstanding wages, entitlements and gratuity within 14 days of the end of the contract.
• The employer may deduct amounts payable under the law or a court judgment, under the conditions in the executive regulation.
• Under the Savings Scheme described on the same page, the employer pays 5.83% of the monthly basic salary if the employee has not completed 5 years of service, and 8.33% if the employee has served more than 5 years.

Work out your number

The free end of service calculator on The Founder works out the gratuity from your contract details, with no sign up. Employers can add up the full cost of a hire in the hiring cost calculator, and post the job on The Founder Jobs.