Quick Overview of UAE Gratuity Law
| Topic | Summary |
|---|---|
| Minimum Service | At least 1 year of continuous service required |
| Basis of Calculation | Last basic salary only (excluding allowances) |
| First 5 Years | 21 days of basic salary per year |
| After 5 Years | 30 days of basic salary per year |
| Maximum Cap | Total gratuity cannot exceed 2 years' basic salary |
| Payment Timeline | Within 14 days of last working day |
Complete UAE Labour Law Articles Related to Gratuity
Article 51 — End of Service Gratuity (Federal Decree-Law No. 33 of 2021)
Federal Decree-Law No. 33 of 2021 replaced the old 1980 Labour Law from 2 February 2022. Article 51 is the cornerstone of gratuity rights. The operative text provides:
Article 51 — End-of-Service Gratuity
1. The employer shall pay the worker who has completed one year or more in continuous service an end-of-service gratuity at the end of the service, calculated as follows:
• 21 days' wage for each year of the first five years.
• 30 days' wage for each year exceeding five years.
The worker is entitled to gratuity for fractions of the year, provided the worker has completed one year of service.2. The wage used as the basis for calculating gratuity shall be the last basic wage received before the service ended.
3. The end-of-service gratuity shall not exceed two years' wage.
4. Gratuity shall be calculated only for periods during which the worker received a wage — unpaid leave periods are excluded.
5. If service ends due to the worker's death, gratuity is paid to the legal heirs.
Key Points:
- Calculated on basic salary only — housing, transport, and other allowances excluded.
- Minimum service: 1 full year. Partial years under 1 year: no gratuity.
- Applies to both limited and unlimited contracts in the private sector.
- Employers cannot contract out of this obligation; any waiver is void.
- Unpaid leave is deducted from the service duration used in the calculation.
- On death of the employee, gratuity passes to legal heirs.
Calculation Formula — Worked Example
First 5 years: (Basic Salary ÷ 30) × 21 × Years (up to 5)
Above 5 years: (Basic Salary ÷ 30) × 30 × Years (above 5)
Example: Basic salary AED 10,000 | Service: 7 years | Termination by employer
Step 1 — First 5 years: (10,000 ÷ 30) × 21 × 5 = AED 35,000
Step 2 — Extra 2 years: (10,000 ÷ 30) × 30 × 2 = AED 20,000
Total Gratuity: AED 55,000
Use the free UAE Gratuity Calculator for your own figure.
2021 Law vs. Old 1980 Law — What Changed for Employees
Federal Decree-Law No. 33 of 2021 replaced Federal Law No. 8 of 1980 which governed UAE employment for over 40 years. Key changes:
| Area | Old Law (1980) | New Law (2021) |
|---|---|---|
| Gratuity Formula | 21 days (yrs 1–5), 30 days after | Identical — formula unchanged |
| Gratuity Cap | 2 years' basic salary | Unchanged |
| New Contract Types | Limited and unlimited both permitted | All new contracts are fixed-term (limited) from Feb 2022 |
| Resignation — Limited Contract | Full gratuity after 1 year | Full gratuity after 1 year — unchanged |
| Resignation — Unlimited Contract | Reduced: 1/3 (1–3 yrs), 2/3 (3–5 yrs), full (5+ yrs) | Same reductions apply to existing unlimited contracts only |
| Impact for Most Employees | Resigned on unlimited = reduced gratuity | New limited contract = full gratuity on resignation |
| Part-Time / Flexible Work | Not explicitly recognised | Legally recognised; gratuity pro-rata |
| Non-Compete Clauses | Broadly enforceable | Max 2 years; must be proportionate |
| Probation Period | Max 6 months | Max 6 months; counts toward service if worker stays |
| Notice Period | 30 days minimum | 30–90 days depending on agreement |
| Wage Protection | Handled by separate WPS circulars | WPS codified in law |
Key takeaway: The gratuity formula did not change. The major benefit of the 2021 law is that employees on new fixed-term contracts receive full gratuity even if they resign.
Dispute Escalation — Step-by-Step Guide
If your employer refuses to pay, delays, or underpays, UAE law provides a structured free escalation path that typically resolves within 4–8 weeks.
Send a formal written notice (email is acceptable) citing the unpaid amount and the 14-day deadline under Article 55. This creates the paper trail needed for Step 2.
File via mohre.gov.ae, the MOHRE app, or call 800 60. MOHRE schedules a free mediation session. Bring your contract, payslips, and Step 1 notice.
If mediation fails, MOHRE refers the case to the Labour Court automatically. Claims under AED 100,000 use a fast-track circuit. Court fees are waived or subsidised for workers.
Additional rights:
- You may file even if you have already left the UAE, within 1 year of your last working day.
- Employers who delay beyond 14 days face administrative penalties under Article 56.
- You are protected against retaliation for filing a legitimate labour complaint.
- MOHRE mediation is free for employees.
- If your employer becomes insolvent, gratuity claims are treated as privileged debts under UAE insolvency law.
Free Zone Employees: DIFC, ADGM, and Others
- DIFC: Operates the DEWS (Daman Employee Workplace Savings) scheme instead of traditional gratuity. Employers contribute monthly; employees access their balance at exit.
- ADGM: Has its own Employment Regulations with end-of-service benefits broadly aligned with Federal Law, but administered by ADGM courts.
- All other free zones (DMCC, JAFZA, DAFZA, RAKEZ, etc.): Follow UAE Federal Labour Law. Standard Article 51 gratuity applies.
If unsure, check the governing law clause in your employment contract or ask your HR department.
Your Full Final Settlement — What You Are Owed
Gratuity is one component. Your complete final settlement should include:
| Component | Basis | Notes |
|---|---|---|
| End-of-service gratuity | Last basic salary | Per Article 51 — use the calculator above |
| Accrued annual leave | Last basic salary | All unused leave days must be paid out |
| Outstanding salary | Full salary | Any unpaid salary up to last working day |
| Notice period pay | Full salary | If notice was not served in full |
| Repatriation allowance | Per contract | If specified in your employment contract |
| Unpaid overtime / commissions | Per contract | Must be settled before final clearance |
Use our Leave Encashment Calculator to compute your annual leave payout alongside your gratuity.
MOHRE Contact Information
📞 MOHRE Hotline
Phone: 600 590000
Labour Disputes: 800 60
Hours: 24/7 (Toll-free within UAE)
Portal: mohre.gov.ae
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