Explanation in Simple Words
The UAE gratuity law explains how employees receive end of service benefits when their job ends. Employers pay this amount as gratuity to eligible private-sector employees under the Dubai labour law. The calculation depends on your basic salary, years of service, and the type of contract you hold.
In simple terms, gratuity rewards you financially for the time you worked in the UAE.
What Is Gratuity Under UAE Employment Rules?
Gratuity as per UAE labour law is calculated only on the basic salary, not on allowances such as housing or transport. The law clearly defines how gratuity should be paid for:
- Limited contracts
- Unlimited contracts
- Resignation
- Termination
This system ensures fairness for both employees and employers.
UAE New Labour Law 2022 – Gratuity Changes
The new gratuity law in UAE 2022 introduced clarity and consistency. Under the UAE new labour law 2022 gratuity system:
- Gratuity is calculated the same way for limited and unlimited contracts
- Employees become eligible after completing 1 year of service
- Calculation rules are standardized across most emirates
Because of this, the new labour law gratuity calculation is now simpler and more transparent.
How Is Gratuity Calculated as per UAE Law?
Standard UAE Labour Law Gratuity Calculation
According to rules:
- For the first 5 years:
21 days of basic salary per year - After 5 years:
30 days of basic salary per year
However, total gratuity must not exceed 2 years’ basic salary.
This method is also known as gratuity calculation as per UAE labour law.
Gratuity Calculation Example (Example)
If your:
- Basic salary = AED 5,000
- Service = 3 years
Daily salary = 5,000 ÷ 30
Gratuity = 21 days × daily salary × years of service
This method applies to how to calculate gratuity as per UAE law and how to calculate gratuity in UAE labour law.
“Labor” vs “Labour” – Is There Any Difference?
You may see both terms:
- UAE labor law gratuity
- UAE labour law gratuity
Both mean the same thing. “Labor” is American English, while “labour” is British English. Google treats both keywords equally.
End of Service Benefits Under UAE Law
End of service benefits UAE law includes:
- Gratuity payment
- Final settlement
- Unpaid salary
- Leave encashment
This full amount is often called final settlement UAE labour law.
Basic Salary Percentage
Gratuity is calculated only on basic salary, not on gross salary. The basic salary percentage in UAE labour law usually ranges between 50% to 70% of total salary, depending on the contract.
This rule directly affects UAE law gratuity calculation.
Gratuity Calculation for Limited Contracts
Under labour law gratuity calculation for limited contract:
- Same formula applies as unlimited contracts (post-2022 law)
- Completion of at least 1 year is mandatory
This change simplified the system significantly.
Dubai Gratuity Law & Emirate Variations
The Dubai gratuity law follows federal UAE labour law. However, some free zones may apply separate regulations. Always check if your employer falls under:
- Mainland UAE
- Free zone authority
For mainland companies, Dubai labour law gratuity calculation follows standard UAE rules.
UAE Law Gratuity Calculator – Why Use One?
A UAE law gratuity calculator helps you:
- Avoid calculation mistakes
- Get instant results
- Understand your entitlement
It is especially useful for employees planning resignation or job change.
What Is Labour Law End of Service?
Labour law end of service refers to all payments an employee receives when employment ends. Gratuity is the main part of this, but not the only one.
Frequently Asked Questions (FAQs)
What is gratuity law in UAE?
It is a legal framework that defines how end of service benefits are calculated and paid.
How to calculate gratuity as per UAE labour law?
Multiply eligible service years by daily basic salary and apply the 21/30 day rule.
Is gratuity paid on basic or gross salary?
Only basic salary is used.
Important Note About Other Countries
This guide focuses on UAE only. Rules such as Qatar labour law gratuity calculation or Kuwait labour law gratuity calculation are different and should not be mixed with UAE laws.
Final Thoughts
The UAE labour law end of service gratuity calculation system is designed to protect employee rights while maintaining fairness for employers. By understanding the rules, you can confidently calculate your gratuity and plan your future.
For best results, always double-check your basic salary and service period before using any gratuity calculator.