UAE Gratuity Calculator
Use our UAE gratuity calculator to accurately calculate your end-of-service benefits as per UAE Labour Law. This online gratuity calculator helps employees in Dubai and across the UAE estimate gratuity based on basic salary, length of service, and contract type.
What is Gratuity in UAE?
Gratuity, also known as end of service benefit, is a lump‑sum payment an employee receives when leaving a job in the UAE after completing the minimum qualifying service period. Gratuity becomes payable once an employee completes at least one year of continuous service.
It is calculated based on the employee’s basic salary, excluding allowances. Gratuity is separate from final settlement items such as unpaid salary, leave encashment, or notice pay. Your gratuity payment cannot exceed two years of your basic salary.
From an employer’s perspective, gratuity payments also form part of overall employment-related liabilities, which should be considered alongside corporate tax in the UAE and payroll compliance requirements.
Online UAE Gratuity Calculator
Use our gratuity calculator UAE to instantly estimate your end-of-service benefits.The calculator automatically applies the correct gratuity formula as per UAE law.
You will need:
- Basic monthly salary (excluding allowances)
- Date of joining
- Last working day
- Reason for leaving (resignation or termination)
How is Gratuity Calculated in the UAE?
The calculation of gratuity in the UAE depends on the total years of service.
Gratuity Formula in UAE
- For the first 5 years: 21 days’ basic salary for each completed year
- After 5 years: 30 days’ basic salary for each additional year
The total gratuity amount is capped at two years’ basic salary, regardless of total service length.
Step‑by‑Step Gratuity Calculation Example
Example 1
- Basic monthly salary: AED 10,000
- Years of service: 4 years
Calculation:
- Daily basic salary = 10,000 ÷ 30 = AED 333.33
- Gratuity per year = 21 × 333.33 = AED 6,999.93
- Total gratuity = AED 27,999.72
Example 2
- Basic monthly salary: AED 12,000
- Years of service: 8 years
Calculation:
- Daily basic salary = 12,000 ÷ 30 = AED 400
- First 5 years: 21 days × 5 years
- Remaining 3 years: 30 days × 3 years
- Total gratuity = AED 78,032.88
Does Contract Type Affect Gratuity?
As per an update by MOHRE, the unlimited contract is no longer valid under the UAE labour law. It has to be converted into a one year fixed-term contract. Gratuity calculation is now standardized, as long as the employee completes at least one year of continuous service.
Understanding employment contracts and gratuity obligations is especially important during business setup in Dubai, as labour law compliance is a key requirement from the initial licensing stage.
Gratuity Rules for Resignation vs Termination
Resignation
Employees who resign after completing one year of service are eligible for gratuity calculated on a pro‑rata basis.
Termination
Employees terminated by the employer (except for gross misconduct) are subject to the same gratuity rules as employees who resigned.
What Salary is Used for Gratuity Calculation?
When you’re using a gratuity calculator in Dubai or anywhere in UAE, only the basic salary is considered. The following are excluded:
- Housing allowance
- Transport allowance
- Commission and bonuses
- Overtime payments
What is the Minimum Service Required for Gratuity in UAE?
Employees must complete at least one year of continuous service to qualify for gratuity. Employees leaving before one year are not entitled to gratuity.
Why Use an Online End of Service Calculator in the UAE?
Using an online gratuity calculator UAE helps you:
- Avoid calculation errors
- Understand your legal entitlement
- Plan finances before resignation or termination
- Cross‑check employer calculations
