What your gratuity is actually worth.

How this is calculated

The formula

After one full year of service you earn 21 days of basic pay for each of the first five years and 30 days for every year after that. Part years count proportionally. The whole thing is capped at two years' pay, a limit that only bites after roughly 25 years of service. Article 51 of Federal Decree-Law No. 33 of 2021.

Below one year of service there is no entitlement at all. That is not a calculation that comes out at zero, it is a different situation: unused annual leave is still paid out.

Basic salary, and why yours may be low

Gratuity is calculated on basic salary alone. Housing, transport, phone allowances and bonuses are excluded by law. On the mainland there is no minimum share that the basic has to represent, which is why many contracts set it at 40 to 50 % of the package. Nothing about that is unlawful, and it quietly halves the end-of-service pay.

In the DIFC the basic must be at least 50 % of the total. If you are negotiating a mainland contract, the split between basic and allowances is worth as much attention as the headline number.

Three things the internet still gets wrong

• Resigning does not reduce your gratuity. The old rules cutting it to one third or two thirds were abolished on 2 February 2022. Hundreds of pages, including law firm articles, still show them.
• Dismissal under Article 44 no longer forfeits it. That was the position under Article 120 of the previous law, and it did not survive the reform.
• Limited and unlimited contracts no longer exist. All contracts are now fixed-term, with a maximum of three years, so any calculator that asks which type you have is working from the old law.

The daily rate the law does not prescribe

To turn a monthly basic into a daily figure, the market divides by 30. Some employers multiply by twelve and divide by 365 instead. The law does not say which, and the difference is about 1.4 %. This tool uses the division by 30 and shows the other result alongside it, so you can check what your contract assumes.

Free zones, DIFC and ADGM

Companies in ordinary free zones follow the federal law, so the calculation above applies unchanged. The DIFC is different: since February 2020 the employer pays a monthly contribution into the DEWS scheme instead of a lump sum, at 5.83 % of basic for the first five years and 8.33 % after that. What you eventually receive is the accumulated contributions plus or minus investment returns, so a lump-sum figure is only a comparison. ADGM uses the same formula as the mainland but settles within 21 days and pays nothing if the contract ends during probation.

When it has to be paid, and the leave trap

Everything is due within 14 days of the end of the contract, under Article 53. Unused annual leave is paid alongside it, and here is the trap worth knowing: leave you take is paid at your full salary, leave you cash out is paid at basic only.

What this tool does not do

• It does not calculate notice pay, unused leave, or compensation for arbitrary dismissal. Notice is paid on the full salary, not the basic, which is the opposite of the gratuity rule.
• It assumes an ordinary end of contract. Absconding cases, unpaid disputes and terminations during probation follow separate rules.
• It cannot tell you what your employer will actually pay. If the figure it produces and the figure on your final settlement differ, the gap is usually in the definition of basic salary or in unpaid leave days.