Under Article 51 of Federal Decree-Law No. 33 of 2021 (the UAE Labour Law), a foreign worker in the private sector who has completed one or more years of continuous service is entitled to an end-of-service gratuity calculated on their last basic wage: the wage of 21 days for each year of the first five years of service, and the wage of 30 days for each year in excess of that. The law caps the total at two years’ wage, and Article 53 requires the employer to pay the gratuity together with all other final entitlements within 14 days of the date the contract ends.
That is the whole statutory formula. Almost every dispute about gratuity in the UAE comes down not to the formula but to three questions underneath it: which figure counts as your basic wage, how many years of service actually count, and whether your particular exit route changes anything. This article works through each of those, with the article of the law attached wherever one exists.
The statutory basis
End-of-service gratuity for private sector employees is governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships, which came into force on 2 February 2022. The relevant provisions are:
- Article 51: entitlement and the calculation for full-time workers.
- Article 52: gratuity for work patterns other than full-time, left to the Executive Regulation (Cabinet Resolution No. 1 of 2022).
- Article 53: the 14-day deadline for paying final entitlements.
- Article 15(1): a shorter deadline of 10 days where the worker has died.
- Article 1: the definitions of “Basic Wage” and “Wage” that the calculation depends on.
Basic wage, not total salary
This is the single most important distinction, and the one most often misunderstood. Article 1 defines Basic Wage as the wage specified in the employment contract, paid in return for the work, and states that it “does not include any other allowances or benefits in kind.” Wage is defined separately as the basic wage plus cash allowances and benefits in kind.
Article 51 calculates gratuity on the basic wage. So housing, transport, utilities, furniture and similar allowances are excluded from the calculation, even though they are part of what lands in your account each month. If your contract splits a AED 20,000 package into AED 12,000 basic and AED 8,000 of allowances, your gratuity is built on the AED 12,000 figure. Checking how your registered MOHRE contract splits basic wage from allowances is therefore the first practical step in working out what you are owed.
How the calculation works
- Confirm you have completed at least one year of continuous service. Article 51(2) sets this threshold, and a worker who has not reached it has no gratuity entitlement under this article.
- Take the last basic wage you were entitled to (Article 51(5)). Not an average, and not an earlier figure.
- Count your years of service, excluding days of absence from work without pay, which Article 51(4) removes from the service period.
- For each year of the first five years, allow 21 days’ basic wage. For each year beyond that, allow 30 days’ basic wage (Article 51(2)(a) and (b)).
- Add a proportionate amount for any part-year, which Article 51(3) allows once one full year of continuous service is complete.
- Check the result against the cap in Article 51(6).
One gap worth naming: Article 51 does not prescribe how a monthly basic wage is converted into a daily rate. It refers to an average daily wage only for workers paid by piece-rate. Dividing the monthly basic wage by 30 is the method commonly applied in practice, but because the law is silent, you should confirm the divisor your employer has used and raise it with the Ministry of Human Resources and Emiratisation (MOHRE) if the figures do not reconcile.
A worked example
The salary figure below is an illustration chosen to make the arithmetic easy to follow. It is not a benchmark, an average, or a suggestion of what any role should pay.
Assume an illustrative monthly basic wage of AED 10,000 and exactly seven years of continuous full-time service, with no unpaid absence.
| Step | Working | Result |
|---|---|---|
| Daily basic wage | AED 10,000 divided by 30 | AED 333.33 |
| First five years | 5 years x 21 days = 105 days x AED 333.33 | AED 35,000 |
| Years six and seven | 2 years x 30 days = 60 days x AED 333.33 | AED 20,000 |
| Gratuity before cap | AED 35,000 + AED 20,000 | AED 55,000 |
The cap is then tested. Article 51(6) provides that the total gratuity must not exceed two years’ wage, so the AED 55,000 figure stands comfortably below it in this illustration. Note that the English text of Article 51(6) uses the word “wage” at this point, while the calculation itself is expressly based on the “basic wage”, two terms the law defines differently. If a long-service calculation comes anywhere near the cap, which figure applies becomes material, and MOHRE is the authority to confirm it.
Resignation, dismissal and other exits
Under the previous labour law, resigning reduced gratuity on a sliding scale. The 2021 law contains no such reduction. Article 51(2) ties entitlement to completing one or more years of continuous service and to the end of service, without distinguishing between resignation and employer termination.
Two further provisions point the same way. Article 39(1)(g) describes disciplinary dismissal as being imposed “while preserving the Worker’s right to end-of-service gratuity.” Article 47(3), on unlawful termination, states that compensation “shall not prejudice the right of the Worker to the warning allowance and the end-of-service gratuity.” Article 45 allows a worker to leave without notice in defined circumstances “while retaining his rights upon termination of service.”
Separately, Article 51(7) permits the employer to deduct from the gratuity any amounts due by law or under a judgment, subject to the Executive Regulation. Entitlement also depends on your contract and your circumstances, so none of the above displaces what your own registered contract says.
UAE nationals, part-time workers and free zones
Article 51(1) provides that a UAE national worker’s end-of-service entitlement is governed by the pensions and social security legislation in force, not by the 21/30-day formula. For foreign workers on work patterns other than full-time, Article 52 defers to the Executive Regulation, and Article 30 of Cabinet Resolution No. 1 of 2022 sets the mechanism. If you work part-time, on a temporary arrangement or on job sharing, the pro-rated rules in that Resolution apply rather than the full-time figures.
Employees of certain financial free zones are outside the federal regime altogether. The Dubai International Financial Centre operates its own employment law and has replaced its end-of-service benefit with funded qualifying schemes, of which DEWS is one. Abu Dhabi Global Market likewise has its own employment regulations. If you are employed by a DIFC or ADGM entity, check that centre’s rules rather than Article 51.
The voluntary savings scheme
Article 51(8) allows the Cabinet to approve alternative end-of-service systems, and MOHRE now operates a voluntary Alternative End-of-Service Benefits Scheme under which an employer can invest employees’ end-of-service benefits in approved funds. MOHRE states plainly that “participating in the Scheme is voluntary” and that “workers will keep the gratuity they earned so far (prior to subscription to the new Scheme).” Contributions are based on basic monthly pay in the month of payment rather than the final salary. If your employer has enrolled you, your pre-enrolment years are still calculated under Article 51 up to the joining date.
If the figure you are offered looks wrong
Article 53 gives the employer 14 days from the contract end date to pay. If payment does not arrive or the calculation is disputed, Article 54 requires the matter to go to MOHRE first, which attempts amicable settlement and may issue a final decision where the amount in dispute does not exceed AED 50,000. A party may challenge that decision within 15 business days of notification. Article 54(9) sets a limitation period: a claim for rights under the law will not be heard after one year from the date the right fell due. Article 55(1) exempts labour claims from judicial fees at all stages where the worker’s claim does not exceed AED 100,000, and Article 65(3) renders void any waiver or settlement of rights that conflicts with the law.
A note on this article
This is general information about how Article 51 works, not legal advice, and it cannot tell you what you are owed. Your entitlement depends on the terms of your own contract, your actual service record, your work pattern and the circumstances in which your employment ended. For a figure you can rely on, work from your MOHRE-registered contract and MOHRE’s own guidance, and take advice from a UAE-qualified lawyer where anything is contested. Worldwide Formations has spent 20+ years helping companies in the UAE get their employment and payroll documentation right from the outset, which is usually what prevents these calculations becoming arguments years later.
Common questions
Is UAE gratuity calculated on basic salary or total salary?
End-of-service gratuity is calculated on the basic wage, not the total package. Article 1 of Federal Decree-Law No. 33 of 2021 defines basic wage as the amount stated in the employment contract excluding allowances and benefits in kind, and Article 51 applies the 21-day and 30-day rates to that figure. Housing, transport and similar allowances are therefore excluded from the calculation.
How many days of salary do you get per year of service in the UAE?
Article 51(2) of the UAE Labour Law provides 21 days’ basic wage for each year of the first five years of service, and 30 days’ basic wage for each year beyond five years. A worker must have completed at least one year of continuous service to qualify at all. Part-years are paid in proportion once that first full year is complete.
Do you lose your gratuity in the UAE if you resign?
No. Federal Decree-Law No. 33 of 2021 contains no provision reducing gratuity because a worker resigned, unlike the previous law. Article 51 ties entitlement to completing one or more years of continuous service, and Articles 39(1)(g) and 47(3) expressly preserve the right to gratuity in disciplinary dismissal and unlawful termination cases. Your contract and the circumstances of leaving can still affect other entitlements, so check both.
How long does an employer have to pay gratuity in the UAE?
Article 53 of the UAE Labour Law requires the employer to pay wages and all other entitlements, including gratuity, within 14 days of the date the employment contract ends. Where a worker has died, Article 15(1) requires payment to the family within 10 days of the date of death or of the employer learning of it. If payment is late, the matter goes to the Ministry of Human Resources and Emiratisation under Article 54.
Is there a maximum gratuity payment in the UAE?
Yes. Article 51(6) of Federal Decree-Law No. 33 of 2021 provides that the total end-of-service gratuity for a foreign worker must not exceed two years’ wage. Unpaid absence is also excluded from the service period under Article 51(4), and Article 51(7) allows the employer to deduct amounts legally due or ordered by a judgment. For long-service calculations approaching the cap, confirm the applicable figure with the Ministry of Human Resources and Emiratisation.
