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UAE end-of-service gratuity: the rules and a calculator

A full-time worker in the private sector who has completed at least one year of continuous service is owed an end-of-service gratuity when the employment ends (Article 51). UAE nationals are covered by the pension law instead.

How it is worked out

• 21 days of basic wage for each of the first five years of service.
• 30 days of basic wage for each year after the fifth.
• Part of a year counts pro rata, once the first full year is complete.
• Days of unpaid absence are not counted as service.
• It is calculated on the last basic wage: the contract wage without allowances or benefits in kind.
• The total may not exceed two years' wage.
• The law counts a month as 30 days and a year as 365 days.

When it must be paid

With the other dues, within 14 days of the end of the contract. The employer may deduct amounts the worker owes under the law or a court judgment.

Example

A basic wage of AED 6,000 and exactly 7 years of service: the daily wage is AED 200 (6,000 ÷ 30). The first 5 years give 5 × 21 × 200 = AED 21,000, the next 2 years give 2 × 30 × 200 = AED 12,000, so the gratuity is AED 33,000, below the cap of two years' wage.

Doing it in BOSS ERP Mini

ERP Mini keeps each employee's basic wage, joining date and unpaid leave, works out the gratuity in the final settlement when an employee leaves, and can book it as a monthly accrual in payroll if you switch that on.