UAE Gratuity Calculator 2026 — End of Service Benefit

Under standard UAE Ministry of Human Resources and Emiratisation (MOHRE) regulatory guidelines, one calendar working day of basic pay is established by dividing the employee's contractual Monthly Basic Wage by 30 days (the uniform accounting month). Alternatively, the annualized daily rate formula divides annual basic pay by 365 days ((Monthly Basic × 12) ÷ 365). Both formulas yield closely comparable results, with the 30-day denominator representing the most prevalent administrative benchmark.

For every completed year during the initial five years of employment, the worker is entitled to twenty-one (21) days of basic wage for each year:

For every continuous year of employment completed past the fifth year, the multiplier elevates to thirty (30) days of basic wage for each incremental year:

1. What if an employee resigns or is terminated before completing one full continuous year of service?

Under Article 51(1) of Federal Decree-Law No. 33 of 2021, the completion of one continuous calendar year (365 days) of active service is a strict statutory prerequisite for gratuity eligibility. If an employee resigns, is terminated, or mutually separates prior to completing 365 days, zero end-of-service gratuity is legally payable. However, the employee remains fully entitled to payment for all days worked up to the last working day and encashment for any accrued, unused annual leave days.

2. How is end-of-service gratuity calculated for employees paid on commissions or performance incentives?

In commission-based employment structures (common in UAE real estate, brokerage, and sales), calculations depend on the contractual wage configuration. If the contract designates a fixed basic salary alongside variable commissions, gratuity is strictly calculated on the fixed basic salary. However, if the employee receives purely commission with no defined basic wage, UAE labor courts and MOHRE directives establish that the basic wage is determined by calculating the daily average of commissions earned over the preceding 12 months before contract termination.

3. Can an employer withhold or forfeit gratuity if an employee is dismissed for gross misconduct under Article 44?

Under the previous 1980 Labour Law, termination under Article 120 resulted in the complete forfeiture of end-of-service gratuity. However, under Federal Decree-Law No. 33 of 2021, the UAE legal framework removed the automatic forfeiture provision. Even when an employee is lawfully dismissed without notice under Article 44 for severe statutory breaches (e.g., forgery, assault, causing substantial material loss), the employee preserves their accrued statutory gratuity, subject only to lawful court judgments or proven counter-debts directly arising from the misconduct.

4. What legal recourse does an employee have if the employer fails to pay gratuity within the 14-day statutory deadline?

If an employer violates Article 53 by failing to disburse final settlement dues within 14 calendar days of contract completion, the employee should submit a formal Labor Complaint through the MOHRE mobile application, website (mohre.gov.ae), or Tawteen service centers. MOHRE will summon the employer for amicable mediation within 14 days. If unresolved, and the claimed amount is under AED 50,000, MOHRE possesses statutory authority to issue an enforceable final decision without court referral. For claims exceeding AED 50,000, the dispute is expedited to the UAE Labour Court with zero court fees levied on employees for claims up to AED 100,000.

5. How are unpaid leave days, maternity leave, and extended sick leaves factored into total service years?

Under Article 51(4), any days of unpaid leave (leave without pay) taken during the period of employment are legally deducted from the calculation of total continuous service. Conversely, statutory paid leaves—such as the 30 days of annual leave, 45 days of fully paid maternity leave (plus 15 half-paid days), 90 days of statutory sick leave, and official national holidays—are legally protected and count fully towards total accumulated continuous service.

6. Is UAE end-of-service gratuity subject to income tax or VAT in the United Arab Emirates?

No. In accordance with the UAE Federal Tax Authority (FTA) regulations and federal tax legislation, the United Arab Emirates levies zero personal income tax on employment earnings, severance settlements, or gratuity payments. Additionally, employment remuneration falls completely outside the scope of UAE Value Added Tax (VAT under Federal Decree-Law No. 8 of 2017). End-of-service gratuity is paid in full without statutory deductions, withholding tax, or administrative tax levies.