Why Your Basic Salary Dictates Your Gratuity
A frequent misunderstanding among UAE workers is why their total bank transfer (gross salary) is not used for end-of-service calculations. Under Article 51 of Federal Decree-Law No. 33 of 2021, statutory gratuity is calculated strictly using the Basic Salary stipulated in your official MOHRE employment contract.
What Constitutes Basic Salary?
The basic salary is the core guaranteed compensation stated in your contract before any allowances, commissions, or discretionary perks. In standard UAE employment practice, basic salary represents approximately 60% of total package value.
What Allowances Are Excluded from Gratuity Calculations?
- Housing / Accommodation Allowance
- Transportation & Vehicle Allowances
- Telephone, Data & Utility Subsidies
- Annual home leave flight ticket allowances
- Discretionary performance bonuses and sales commissions
- Overtime compensation and special project premiums
Negotiation Tip for Job Seekers
When evaluating competing job offers in Dubai or Abu Dhabi, always examine the basic-to-allowance ratio. An offer of AED 20,000 with a 70% basic salary (AED 14,000) generates significantly higher gratuity, leave pay, and overtime earnings than an offer of AED 20,000 with a 50% basic salary (AED 10,000).