UAE Gratuity Calculation

Gratuity, a key component of employee benefits in the UAE, serves as a crucial incentive for employee loyalty and retention. This guide elucidates the intricacies of gratuity calculation in the UAE, encompassing eligibility criteria, calculation rules, and practical examples for both employers and employees.

Understanding Gratuity Calculation in the UAE:

Gratuity, also known as End-of-Service Benefits, is a statutory payment mandated by the UAE Labor Law for employees upon completion of their service tenure. While it fosters loyalty and incentivizes long-term commitment, understanding its calculation methodology is imperative for both employers and employees.

Eligibility Criteria for Gratuity Entitlement:

Expatriate workers in the UAE become eligible for gratuity payments upon completing one year of continuous service with their employer. However, certain conditions, such as contract type and termination circumstances, influence entitlements and exceptions.

Gratuity Calculation Rules in the UAE:

Gratuity calculation in the UAE adheres to specific rules outlined by the Labor Law. The calculation is based on the employee’s last drawn basic salary, excluding additional allowances. Contract type (limited or unlimited) and the nature of termination (resignation or termination) further influence the calculation process.

Calculation Methods Based on Contract Types:

  • Limited Contract Gratuity Calculation: For fixed-term contracts, gratuity is computed based on the duration of service. Employees are entitled to 21 days’ salary for each year of service for the first five years and 30 days’ salary for subsequent years.
  • Unlimited Contract Gratuity Calculation: In indefinite contracts, gratuity calculation varies depending on whether the employee resigns or is terminated. Different formulas are applied to determine entitlements based on service duration and termination circumstances.

UAE Gratuity Calculation Formula 2024 with Examples:

Practical examples and formulas illustrate gratuity calculation scenarios, providing clarity on the computation process for both employers and employees. Formulas for limited and unlimited contracts, along with calculation upon resignation and termination, are elucidated with clear examples for better comprehension.

Conditions for Deprivation of Gratuity:

While gratuity is a fundamental entitlement for employees, certain conditions may lead to deprivation of gratuity payments. Instances such as resignation without notice, termination due to misconduct, or failure to meet contractual obligations may warrant withholding gratuity.


Gratuity calculation in the UAE is governed by established rules and regulations to safeguard the rights of both employers and employees. By understanding the calculation methodology, adhering to legal requirements, and seeking recourse in case of disputes, both parties can ensure fair and equitable gratuity entitlements, fostering a harmonious work environment.

Gratuity Calculator

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