Gratuity Calculator Limited Contract — End-of-Service Pay Under UAE Labour Law

Instant AED estimate · Article 51 formula · Resignation and termination covered

Free calculationArticle 51 formulaDemand letter includedResignation & terminationUpdated for 2026

Employment details

Your employment dates and the reason your employment ended.

Most UAE employment after 2022 is unlimited term under FDL 33/2021.

This gratuity calculator for limited contract employees gives you an instant AED figure using the current UAE formula under Article 51 of Federal Decree-Law No. 33 of 2021. If you searched for this term because you remember limited contracts carrying a resignation penalty, that rule was removed in February 2022. Every private-sector contract in the UAE today is a fixed-term, limited contract, and resignation no longer reduces your gratuity.

Enter your salary and employment dates in the calculator above for your exact entitlement. Below it, this guide covers the current formula, what changed from the old law, worked examples, and the steps to take if your employer has not paid.

What Is a Limited Contract in the UAE Today?

A limited contract is a fixed-term employment agreement with a defined start and end date. Before February 2022, the UAE also had a second contract type, the unlimited contract, which had no fixed end date and different gratuity rules on early resignation. Federal Decree-Law No. 33 of 2021 removed that second category. Every private-sector employment contract registered with MOHRE is now a limited contract, capped at three years and renewable.

This means if your offer letter or MOHRE contract still uses the word "unlimited," it was likely signed before 2022. Its gratuity terms going forward are still governed by the current Article 51 formula, not the older unlimited-contract rules.

Old Law vs Current Law: What Changed

Before Feb 2022Current Law
Contract lengthUnlimited: open-ended. Limited: fixed term, historically up to 4 years.Every contract is now fixed-term, maximum 3 years, renewable.
Gratuity on resignationLimited contract: forfeited entirely if resigning before the term ended without reasonable cause. Unlimited: reduced to 1/3 or 2/3 depending on years served.Full gratuity at the standard rate, no reduction, once 1 year of service is completed.
Gratuity on terminationFull gratuity payable in most cases, subject to exceptions for misconduct.Full gratuity payable, including in most Article 44 misconduct dismissals.
Governing lawFederal Law No. 8 of 1980Federal Decree-Law No. 33 of 2021 (Article 51), in force since 2 February 2022
FormulaSame 21/30-day structure, but reduced by resignation penalties above.21 days’ basic pay per year for the first 5 years, 30 days per year after, capped at 24 months’ basic pay.

Current UAE Labour Law Rules for Limited Contracts

Article 51

Sets the gratuity formula: 21 days’ basic wage per year for the first 5 years, 30 days per year after that, for anyone with at least 1 year of continuous service.

Article 53

Requires employers to pay all end-of-service entitlements within 14 days of the contract end date. Confirms the 2-year (24-month) cap on total gratuity.

Article 43

Sets the maximum limited contract term at 3 years, renewable by agreement between employer and employee.

Article 44

Governs summary dismissal for serious misconduct. Accrued gratuity is generally retained even in Article 44 dismissals, unlike under the 1980 law.

FDL No. 9 of 2024

Lets MOHRE issue a directly enforceable payment order for claims up to AED 50,000, including gratuity disputes, without the employee going to court first.

The Gratuity Formula

Three steps produce the same number the calculator above shows.

Step 1 — Daily wage

Daily wage = Basic monthly salary ÷ 30

Step 2 — Accrued days

First 5 years: 21 days × years worked (up to 5)

Years beyond 5: 30 days × additional years worked

Step 3 — Apply the cap

Gratuity = Accrued days × Daily wage, capped at 24 × Basic monthly salary

Fractions of a year are paid proportionally. Six months into your third year contributes roughly half of that year's accrual, once you have already passed the 1-year eligibility threshold.

How to Use the Limited Contract Gratuity Calculator

The tool above has four steps. First, enter your employment start date, last working day, and the reason your employment ended. Second, enter your basic monthly salary; a live gratuity estimate and full breakdown appear on this step, using the 21/30-day formula and the statutory two-year cap. Third, if you want a formal letter to send your employer, add your name and your employer's details. Fourth, preview the finished demand letter, which cites Article 51 and the MOHRE complaint procedure, and download it.

You do not need to reach the final step to get a number. The calculation on step two is free and does not require a sign-up. The demand letter is only needed if your employer has not paid within the 14-day statutory window.

Worked Examples

Real AED figures for common salary and tenure combinations, using the exact formula the calculator above applies.

Basic salaryYears servedDays accruedGratuity (AED)
AED 5,0001.531.5AED 5,250
AED 8,000242.0AED 11,200
AED 10,000484.0AED 28,000
AED 12,0006135.0AED 54,000
AED 15,0008195.0AED 97,500
Cap example:An employee on AED 9,000 basic salary with 27 years of service would accrue 705 gratuity days, worth AED 211,500 uncapped. The statutory cap limits total gratuity to 24 months' basic salary, so the payable amount is capped at AED 216,000.

Resigning From a Limited Contract: What Actually Happens Now

Under the 1980 labour law, resigning from a limited contract before its term ended, without a legally recognized reason, could forfeit your entire gratuity. That rule was removed when Federal Decree-Law No. 33 of 2021 took effect on 2 February 2022.

🚪 Resignation

Full gratuity at the standard formula, provided you completed at least 1 year of continuous service. No forfeiture and no reduction, regardless of notice given or how much of the contract term remains.

📋 Termination

Full gratuity at the identical formula. Even summary dismissal under Article 44 generally preserves accrued gratuity, though the employer can pursue separate damages if losses are proven.

Common Mistakes When Calculating Limited Contract Gratuity

📜

Applying the old resignation penalty

Under the 1980 law, resigning from a limited contract before its term ended could forfeit gratuity completely. That penalty was removed when Federal Decree-Law No. 33 of 2021 took effect in February 2022. Resignation today does not reduce your entitlement.

💰

Using gross salary instead of basic salary

Housing allowance, transport allowance, and other benefits are excluded from the calculation. Only the basic wage stated in your MOHRE-registered contract counts.

📆

Counting unpaid leave as service time

Unpaid leave is excluded from the service period used to calculate gratuity. Paid sick leave and maternity leave still count.

🔢

Applying 30 days per year from year one

The 30-day rate applies only to years beyond the first five. The first five years accrue at 21 days per year regardless of total tenure.

🧮

Forgetting the two-year cap

Total gratuity cannot exceed 24 months of basic salary, no matter how many years you worked. Long-tenured employees should check whether their total has hit this ceiling.

⏳

Assuming a 3-year limited contract auto-caps your gratuity

Renewing a limited contract does not reset your service period for gratuity purposes if your role and employer stayed the same. Continuous service is what counts, not the number of contract renewals.

⚖️

Treating termination and resignation differently

Both now use the identical Article 51 formula, provided the 1-year minimum service requirement is met. There is no separate, lower rate for people who resign.

📄

Confusing "limited contract" with a probation period

A limited contract refers to the fixed term of the whole employment agreement, not the probationary period at the start of it. Probation does not change how gratuity is calculated once the 1-year threshold is met.

🏢

Assuming DIFC or ADGM rules apply outside those zones

DIFC and ADGM run separate employment regimes (DEWS and the ADGM Employment Regulations). Every other UAE mainland and free zone employer follows the standard federal Article 51 formula.

🚫

Assuming Article 44 dismissal cancels gratuity

Under current law, employees dismissed for serious misconduct generally keep their accrued gratuity if they completed 1 year of service. Employers can pursue separate damages claims, but forfeiting the entire entitlement is no longer automatic.

If Your Employer Doesn't Pay Gratuity on Time

Employers have 14 days from your contract end date to pay all end-of-service entitlements under Article 53. If that deadline passes, a formal demand letter citing the law is the standard first step before filing a MOHRE complaint.

✉️
End of Service Gratuity Demand Letter

Article 51-cited letter with your gratuity calculated automatically

📝
End of Service Demand Letter Generator

General end-of-service entitlement demand letter

🏢
Gratuity Demand Letter — Abu Dhabi

Abu Dhabi-specific gratuity demand letter and calculator

🏗️
Gratuity Demand Letter — Dubai

Dubai-specific gratuity demand letter and calculator

⚠️
Employer Not Paying Gratuity

What to do, and how to escalate, when gratuity is withheld

🔁
Gratuity After Resignation

How resignation affects, and does not affect, your entitlement

📋
Gratuity After Termination

How termination affects your entitlement under Article 51

🚫
Gratuity Not Paid After Resignation

Steps to take when a resigned employee is not paid on time

🏛️
MOHRE Complaint Letter Generator

Formal MOHRE complaint if gratuity is not paid within 14 days

Frequently Asked Questions — Gratuity Calculator Limited Contract

Do limited contracts still exist in the UAE?
Yes, in a different form. Since Federal Decree-Law No. 33 of 2021 took effect in February 2022, every private-sector employment contract in the UAE is a fixed-term (limited) contract, with a maximum duration of three years, renewable. The old distinction between "limited" and "unlimited" contracts, where each had different resignation penalties, no longer exists.
How is gratuity calculated on a limited contract?
The same way as any other UAE private-sector contract, under Article 51 of Federal Decree-Law No. 33 of 2021: 21 days of basic salary for each of the first five years of service, and 30 days of basic salary for each year after that, capped at 24 months of basic salary in total.
Do I lose my gratuity if I resign before my limited contract ends?
No. The old rule that could forfeit your gratuity for resigning early from a limited contract was removed in 2022. As long as you have completed at least one year of continuous service, resignation and termination now receive identical gratuity treatment.
What is the minimum service period to qualify for gratuity?
One full year of continuous service with the same employer. Employees who leave before reaching 12 months, whether by resignation or termination, are not entitled to statutory gratuity, though they remain entitled to unpaid wages and accrued annual leave.
What salary is used in the calculation?
Only your basic salary, the fixed monthly wage stated in your MOHRE-registered contract. Housing allowance, transport allowance, bonuses, commissions, and overtime are all excluded, regardless of size.
Can my limited contract be renewed, and does that reset my gratuity?
A limited contract can be renewed, and renewal does not reset continuous service for gratuity purposes if you stay with the same employer. Gratuity is calculated on total years of continuous employment, not on the number of contracts signed.
Is there a maximum gratuity amount?
Yes. Total gratuity cannot exceed 24 months of basic salary, regardless of years worked. Employees with roughly 25 or more years of service are the ones most likely to hit this ceiling.
How long does my employer have to pay gratuity after my limited contract ends?
Fourteen days from the contract end date, under Article 53 of the Labour Law. If that deadline passes, you can file a MOHRE complaint, and under Federal Decree-Law No. 9 of 2024, MOHRE can issue a directly enforceable payment order for claims up to AED 50,000 without requiring you to go to court first.
Are UAE nationals entitled to gratuity on a limited contract?
No. UAE nationals are covered by federal and local pension and social security legislation instead of the Article 51 gratuity system, which applies specifically to expatriate private-sector employees.
What happens to gratuity if my limited contract is terminated for misconduct?
Under current law, employees dismissed under Article 44 for serious misconduct generally retain their accrued gratuity if they completed one year of service. This is a change from the old law, where misconduct could forfeit the entire entitlement. Employers can still pursue proven damages separately.
Is gratuity taxable in the UAE?
The UAE has no personal income tax, so gratuity payments are not subject to income tax. If you have since moved to a country that does tax foreign income, check that country’s own rules on how it treats end-of-service payments.

Related Gratuity Tools

🇦🇪
UAE Gratuity Calculator

General end-of-service calculator for any emirate

🏙️
Dubai Gratuity Calculator

Same Article 51 formula, Dubai-specific context

🕌
Abu Dhabi Gratuity Calculator

Same Article 51 formula, Abu Dhabi-specific context

🌊
Sharjah Gratuity Calculator

Same Article 51 formula, Sharjah-specific context

📨
Gratuity Calculator + Demand Letter

Calculate your entitlement, then generate a formal demand letter

📋
Gratuity Law Explained

Full breakdown of Article 51, 52, and 53 obligations

Calculate Your Limited Contract Gratuity Now

Enter your basic salary and employment dates in the calculator above for an instant, itemized breakdown. If your employer hasn't paid within 14 days of your last working day, use one of the demand letter tools above to escalate formally.

Back to Calculator ↑

Methodology: This calculator and guide apply the gratuity formula in Article 51 of Federal Decree-Law No. 33 of 2021, as published on the official UAE Government portal, together with the 14-day payment rule under Article 53 and MOHRE enforcement provisions under Federal Decree-Law No. 9 of 2024. For company-specific guidance or complaint filing, refer to the Ministry of Human Resources and Emiratisation (MOHRE).

Disclaimer: This tool gives an estimate for general informational purposes and is not legal advice. It does not account for lawful employer deductions, unpaid leave adjustments, alternative Savings Scheme enrolment, or contract-specific terms. Confirm your exact entitlement against your MOHRE-registered contract or consult a qualified labour law professional.

Last updated: July 2026 · Reviewed by: OfficeDraft Payroll Research Team