Gratuity Calculator for Unlimited Contract — UAE End-of-Service Pay

Instant AED estimate · Article 51 formula · Covers old unlimited and current limited contracts

Free calculationArticle 51 formulaDemand letter includedCovers old and current contractsUpdated 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.

If you were hired on an unlimited contract in the UAE, or your paperwork still uses that term, this gratuity calculator for unlimited contracts gives you an instant AED figure using the formula that currently applies to every private-sector employee in the country. The short version: the unlimited contract category was removed from UAE law in February 2022, and gratuity for every employee, whatever their contract is called, now runs through Article 51 of Federal Decree-Law No. 33 of 2021.

The rest of this page covers what an unlimited contract was, how the old and current rules differ, the exact formula with worked examples, and what to do if your employer is applying outdated reductions to your payout.

What Is an Unlimited Contract?

An unlimited contract (also called an open-ended contract) was an employment agreement with no fixed end date. It ran until either party gave notice to end it, and it was one of two contract types recognized under the old 1980 UAE labour law, the other being the limited (fixed-term) contract.

Under that old law, the two contract types were treated differently for gratuity purposes. An employee on an unlimited contract who resigned before completing five years received a reduced gratuity, on a sliding scale: roughly one-third of the full entitlement between one and three years of service, two- thirds between three and five years, and the full amount only after five years or on termination by the employer.

Federal Decree-Law No. 33 of 2021 removed the unlimited contract category entirely. Since 2 February 2022, every private-sector employment contract in the UAE is a limited, fixed-term contract, with a maximum term of three years, renewable. Existing unlimited contracts were required to be converted to limited contracts during a transition period set by the Ministry of Human Resources and Emiratisation.

How the Unlimited Contract Gratuity Calculator Works

The tool above has four short steps. First, enter your employment start and last working day and select why your employment ended. Second, enter your basic monthly salary; a live gratuity estimate with a full breakdown appears immediately, using the 21/30-day formula and the statutory two-year cap. If you want a formal document to send your employer, the third step collects your name and your employer's details, and the fourth step previews the finished demand letter, citing Article 51 and the MOHRE complaint procedure, ready to download.

You do not need to reach the last step just to get a number. The calculation on step two is free and needs no signup. The demand letter is only needed if your employer has not paid within the 14-day statutory window.

UAE Labour Law Rules: Eligibility, Resignation, Termination

These rules apply the same way regardless of whether your contract is labeled limited or unlimited, since the current law only recognizes limited contracts.

Minimum service1 full year of continuous service with the same employer
ResignationFull gratuity payable, same formula as termination
Termination by employerFull gratuity payable, same formula as resignation
Dismissal for misconduct (Article 44)Accrued gratuity generally retained
RetirementFull gratuity payable under the standard formula
Death in serviceGratuity paid to the legal heirs
UAE nationalsNot covered — pension and social security law applies instead

Unlimited Contract Gratuity Formula

The formula has three steps. Once you know your basic salary and total years of service, you can reproduce exactly what 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 worth of days, once you have already passed the one-year eligibility threshold.

Manual Calculation, Step by Step

  1. 1. Confirm eligibility. You need at least one full year of continuous service. If you have less, statutory gratuity does not apply.
  2. 2. Find your basic salary. Check your MOHRE-registered contract, not your total monthly pay slip figure.
  3. 3. Divide by 30. This gives your daily wage.
  4. 4. Count your years of service. Subtract any unpaid leave days from the total period first.
  5. 5. Apply the day rate. 21 days per year for the first five years, 30 days per year after that.
  6. 6. Multiply days by daily wage. This is your uncapped gratuity figure.
  7. 7. Check the cap. If the result exceeds 24 months' basic salary, the cap applies instead.

Worked Examples

The table below shows AED figures for common salary and tenure combinations, using the same formula as the calculator above.

Basic salaryYears servedDays accruedGratuity (AED)
AED 3,000242.0AED 4,200
AED 5,000363.0AED 10,500
AED 8,000484.0AED 22,400
AED 10,0006135.0AED 45,000
AED 15,0008195.0AED 97,500
AED 20,00012315.0AED 210,000
Long-service example (the cap in action): An employee with a basic salary of AED 10,000 and 28 years of service accrues 795 gratuity days, worth AED 265,000 uncapped. Because total gratuity is capped at 24 months' basic salary, the amount actually payable is AED 240,000.

Limited vs Unlimited Contract: Old Rules Compared

This comparison covers the rules that applied before February 2022, for context. It does not describe current law, since the unlimited category no longer exists.

FactorLimited (old)Unlimited (old)
Contract end dateFixed term, set in advanceNo fixed end date
Resignation before 1 yearNo gratuityNo gratuity
Resignation, 1–3 yearsFull gratuity1/3 of gratuity
Resignation, 3–5 yearsFull gratuity2/3 of gratuity
Resignation, 5+ yearsFull gratuityFull gratuity
Termination by employerFull gratuityFull gratuity
Early termination by employeeCompensation owed to employer, up to 3 months' payNo separate compensation clause

Under the current law, none of these old distinctions apply. Every employee, regardless of what their contract used to say, is assessed under the single Article 51 formula shown above.

Common Mistakes When Calculating Unlimited Contract Gratuity

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Assuming "unlimited contract" still changes the formula

Since February 2022 every private-sector contract in the UAE is a limited, fixed-term contract by law. If your paperwork says "unlimited," the label is outdated. Your gratuity is worked out the same way as everyone else's, under Article 51.

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Using gross salary instead of basic salary

Housing allowance, transport allowance, and other benefits are left out of the calculation. Only the fixed basic wage stated in your MOHRE-registered contract counts.

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Counting unpaid leave as service time

Days taken as unpaid leave are excluded from the service period used to calculate gratuity. Paid sick leave and maternity leave still count.

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Applying the 30-day rate from year one

The 30-day rate only applies to years of service beyond the first five. The first five years accrue at 21 days per year no matter how long the total tenure is.

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Believing resignation cuts your gratuity

Under the old 1980 labour law, resigning before five years under an unlimited contract reduced the payout. That reduction was removed in 2022. Resignation and termination now receive identical treatment, provided you have completed one year of service.

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Forgetting the two-year cap

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

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Applying mainland rules in DIFC or ADGM

DIFC and ADGM run their own employment regimes, including DEWS in DIFC. Mainland Article 51 does not apply there in the same way.

If Your Employer Won't Pay Your Gratuity

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, law-cited demand letter is the standard first step before escalating to MOHRE.

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End of Service Gratuity Demand Letter

Article 51-cited letter with your gratuity calculated automatically

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End of Service Demand Letter Generator

General end-of-service entitlement demand letter

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Gratuity Demand Letter — Abu Dhabi

Abu Dhabi-specific gratuity demand letter and calculator

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Gratuity Demand Letter — Dubai

Dubai-specific gratuity demand letter and calculator

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Employer Not Paying Gratuity

What to do when gratuity is withheld past the 14-day deadline

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Gratuity After Resignation

How resignation affects, and does not affect, your entitlement

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Gratuity After Termination

What changes, and what stays the same, when you are let go

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Gratuity Not Paid After Resignation

Escalation steps if your former employer stays silent

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Gratuity Law Explained

Full breakdown of Article 51, 52 and 53 obligations

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MOHRE Complaint Letter Generator

Formal MOHRE complaint if gratuity is not paid within 14 days

Frequently Asked Questions — Unlimited Contract Gratuity

Does an unlimited contract still exist in the UAE?
No, not for new agreements. Federal Decree-Law No. 33 of 2021 abolished the unlimited contract category when it took effect on 2 February 2022. Every private-sector employment contract is now a limited, fixed-term contract, capped at three years and renewable. Older contracts that still use the word "unlimited" are read against the current law, not the one they were signed under.
How is gratuity calculated for an unlimited contract?
Under the current law, the same formula applies regardless of what your contract calls itself: 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' total basic salary. The unlimited-contract-specific reductions that existed under the 1980 law no longer apply to any active employment relationship.
Can I get gratuity after resigning from an unlimited contract?
Yes. Under the 1980 law, resigning from an unlimited contract before five years reduced your gratuity to a fraction of the full amount. That penalty was removed in 2022. As long as you have completed one year of continuous service, resignation and termination now receive the same gratuity treatment.
Is gratuity based on basic salary or total salary?
Basic salary only. Housing allowance, transport allowance, utilities, bonuses, commissions, and overtime are all excluded, even where they make up most of your monthly pay. Only the fixed basic wage stated in your MOHRE-registered contract is used.
What is the gratuity formula under UAE labour law?
Daily wage = basic monthly salary ÷ 30. You accrue 21 days' pay per year for the first five years, then 30 days' pay per year for each year after that. Multiply accrued days by the daily wage, then apply the 24-month cap if it applies.
How much gratuity will I receive after 5 years on an unlimited contract?
At exactly 5 years, you accrue 105 days of basic pay (21 days × 5). On a basic salary of AED 10,000, that works out to AED 35,000, before any cap applies. The 30-day rate only starts from year six onward.
Who is eligible for gratuity in the UAE?
Any private-sector employee, of any nationality except UAE nationals, who has completed at least one year of continuous service. UAE nationals are covered by pension and social security legislation instead of Article 51.
Does unpaid leave affect my gratuity calculation?
Yes. Days spent on unpaid leave are subtracted from your total service period before the formula is applied. Paid sick leave and maternity leave are not affected and still count toward your service period.
What happens to my gratuity if I am terminated?
Termination by the employer is treated the same as resignation under the current law. You receive the standard 21/30-day formula, provided you have completed one year of service, regardless of who ended the contract.
Can my employer refuse to pay gratuity?
No, not if you meet the one-year minimum. An employer can dispute the amount or raise deductions for proven damages, but cannot refuse payment outright. Article 53 gives employers 14 days from the contract end date to settle end-of-service entitlements. Missing that deadline exposes the employer to a MOHRE complaint.
What is the maximum gratuity I can receive?
Total gratuity is capped at 24 months' basic salary, regardless of total years of service. Employees with roughly 25 or more years of service are the ones most likely to hit this ceiling.
Does my old unlimited contract get converted automatically?
Yes. The Ministry of Human Resources and Emiratisation required all active unlimited contracts to be converted to limited contracts by the end of a transition period following the new law. If your contract still shows "unlimited" status in MOHRE records, that should have been corrected; the current Article 51 formula applies to you either way.
Is there a difference in notice period between old unlimited and current limited contracts?
Notice periods are now set by the current law and your specific contract terms, generally between 30 and 90 days, agreed between employer and employee. The old unlimited-contract default notice period rules no longer apply on their own.
Do part-time employees get gratuity on an unlimited or limited contract?
Yes, on a pro-rata basis. Part-time and other flexible work arrangements accrue gratuity in proportion to hours actually worked compared to a full-time role, once the one-year minimum service requirement is met.
Are UAE nationals entitled to gratuity?
No. UAE nationals are covered by separate federal and local pension and social security legislation instead of the Article 51 gratuity system, which applies to expatriate private-sector employees.
What if my employer says I get less gratuity because my contract was unlimited?
That is incorrect under current law. The reduced-payout rule for early resignation from an unlimited contract belonged to the 1980 labour law and no longer applies. If your employer is applying it anyway, you can raise a MOHRE complaint citing Article 51 of Federal Decree-Law No. 33 of 2021.

Related Gratuity Calculators

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UAE Gratuity Calculator

General end-of-service calculator for any emirate

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Dubai Gratuity Calculator

Same Article 51 formula, Dubai-specific context

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Abu Dhabi Gratuity Calculator

Same formula, Abu Dhabi-specific context

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Sharjah Gratuity Calculator

Same formula, Sharjah mainland and free zones

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DIFC Gratuity Calculator

DEWS-based calculation for DIFC employees

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Gratuity Calculator + Demand Letter

Calculate your entitlement, then generate a formal demand letter

Calculate Your Gratuity in Seconds

Whether your contract is labeled limited or unlimited, the Article 51 formula applies to you the same way. Enter your basic salary and employment dates in the calculator above for an instant, transparent breakdown, and if your employer hasn't paid, use one of the demand letter tools above to escalate formally.

Back to Calculator ↑

Methodology: This calculator and guide apply the gratuity formula set out 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. Historical unlimited-contract rules are described for context and no longer apply to active employment relationships. 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. For your exact entitlement, check your MOHRE-registered contract or consult a qualified labour law professional.

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