Gratuity (مكافأة): Know Your Rights as a UAE Employee

Gratuity (مكافأة) is a lump-sum payment given to employees in the UAE and Dubai at the end of their service. According to UAE Labour Law, employers are required to pay gratuity after at least one year of continuous service. The amount depends on the length of service, the type of employment contract, and the reason for job termination.

How Does the UAE Gratuity Calculator Work?

The UAE Gratuity Calculator simplifies the process of estimating your end-of-service benefits. Instead of manual calculations, this online tool automatically determines your gratuity by collecting essential inputs such as basic salary, length of service, contract type (limited or unlimited), and separation type (resignation or termination). It delivers accurate, law-aligned results in seconds.

How this Gratuity Calculator Helped Ahmad Instantly Estimate His End-of-Service Pay.

Ahmed worked in Dubai for 4 years under a limited contract with a basic salary of AED 7,000. When his contract ended, he wanted to know how much gratuity he was entitled to. Instead of calculating it manually, he used the UAE Gratuity Calculator.

He simply entered:

• Basic Salary: AED 7,000
• Contract Type: Limited
• Separation Type: End of Contract
• Start Date: March 1, 2020
• End Date: March 1, 2024

With just a click, the calculator applied the UAE Labour Law formula and instantly estimated his end-of-service gratuity as AED 19,600, based on 21 days’ salary per year of service.

No paperwork, no errors — just fast and accurate results.

Steps to Accurately Calculate Your End-of-Service Benefits

To generate a reliable gratuity estimate, you need to:

1. Confirm that you’ve completed at least one year of uninterrupted service.
2. Enter your final basic salary (excluding allowances).
3. Specify the contract type (limited or unlimited).
4. Choose the reason for leaving (resignation or termination).
5. Input your start and end employment dates.

Gratuity Formula for Limited Contracts

• 1 to 5 Years: Gratuity = (Basic Salary x 21 days x Service Years) / 30
• More than 5 Years: Gratuity = (Basic Salary x 30 days x Service Years) / 30

Gratuity Formula for Unlimited Contracts

• Resignation:
  • Less than 1 year: No gratuity.
  • 1-3 years: 1/3 of 21 days per year.
  • 3-5 years: 2/3 of 21 days per year.
  • 5+ years: Full 21 days for first 5 years, then 30 days for each additional year.
• Termination:
  • Less than 1 year: No gratuity.
  • 1-5 years: 21 days of basic salary per year.
  • Over 5 years: 21 days for first 5 years, 30 days per year thereafter.

When and Why the Gratuity May Be Denied

Under Article 139 of the UAE Labour Law, gratuity may be forfeited if:

• The employee resigns without valid reason or notice.
• The employee is terminated due to misconduct or policy violations.
• The employee has not completed one year of continuous service.

How to Secure Your Gratuity Payment

• Read and understand your employment contract thoroughly.
• Keep detailed records of your employment history, including start/end dates, contract type, and salary.
• Discuss any concerns with your employer transparently.
• Seek legal advice if disputes arise over gratuity entitlements.

Our Best Calculators

Stock Market Average Calculator

BMI Calculator online

UAE New Labor Law (2025) Employment Guide

Fixed-Term Contracts

All employees must now have fixed-term contracts, with a minimum duration of three years. Unlimited contracts are no longer allowed.

Probation Period

The probation period remains at six months. Notice periods are 14 days for termination by the employer and one month for resignation, or 14 days if leaving the UAE.

Flexible Working Hours

Employees can choose a rest day with the employer’s agreement. Overtime is capped at 144 hours every three weeks, calculated based on the basic salary.

Leave Entitlements

• Maternity Leave: 60 days (45 days fully paid, 15 days at half pay). Additional leave for miscarriage, stillbirth, or a disabled child.
• Study Leave: 10 days annually for employees with more than two years of service, applicable to studies at UAE institutions.
• Leave to Find a New Job: One unpaid day per week during the notice period for job search.
• Compassionate Leave: 5 days for spouse’s death, 3 days for death of immediate family members.

Termination and Contract Suspension

Notice Period: 30 days for less than five years, 60 days for five to ten years, 90 days for more than ten years.

Suspension: Employees may be suspended for 30 days with half pay during investigation.

End-of-Service Gratuity

Employees are entitled to full gratuity after one year of service, payable within 14 days after leaving the company.

Salary Payment Currency

Salaries must be paid through the Wages Protection System (WPS) and can be in UAE Dirhams or another agreed-upon currency.

Equality and Anti-Discrimination

The law prohibits discrimination based on gender, race, nationality, or disability. Employers must ensure equal pay for equal work.

Disciplinary Actions

Penalties for workplace violations include termination, loss of promotions, or increments. Employees are protected against harassment.

Unemployment Insurance

A new scheme provides up to AED 20,000 for employees who lose their job, with exclusions for certain groups like investors and minors.

Conclusion

Understanding your entitlement to gratuity under UAE Labour Law is essential for every employee in the UAE. Whether you are under a limited or unlimited contract, knowing how to calculate your end-of-service benefits can save you time, effort, and ensure you receive what you’re owed. With the UAE Gratuity Calculator, you can quickly and accurately determine your gratuity, ensuring compliance with the law and avoiding any misunderstandings.

Remember, your gratuity depends on your length of service, contract type, and reason for termination. Be sure to keep track of your employment history and consult with your employer if you have any concerns. By knowing your rights and using helpful tools like the gratuity calculator, you can confidently navigate your end-of-service benefits and secure your payment without hassle. If you ever face disputes, seeking professional advice can help you safeguard your entitlements.

Your hard work deserves recognition, and with the right knowledge, you can ensure that your gratuity is calculated and paid fairly.

FAQs

Who qualifies for gratuity in the UAE?

Expatriate employees in the private sector who’ve completed at least one year of continuous service are eligible.

When does an employee become eligible?

Eligibility begins after completing one year of service, regardless of resignation or termination.

Is there a gratuity cap?

Yes. The gratuity amount cannot exceed two years of the employee’s basic salary.

How is accrued gratuity calculated?

• Up to 5 years: 21 days per year of service
• Beyond 5 years: 30 days per year for each additional year

When can employers deny gratuity?

Employers may deny gratuity due to:

• Proven employee misconduct
• Lack of documented contract
• Service period under one year