Legal GuideUpdated June 2026

UAE Gratuity Law Explained

A complete explanation of UAE gratuity law under Federal Decree-Law No. 33 of 2021 — the current UAE Labour Law. Covers who qualifies, how gratuity is calculated, what changed for resignation, how free zones differ, and what to do if your employer has not paid. Written for employees, HR professionals, and employers. Updated June 2026.

✓ Article 51 FDL 33/2021✓ Reviewed by UAE employment specialist✓ Updated June 2026✓ MOHRE enforcement covered

Quick tools

→ Calculate your gratuity→ Generate demand letter→ MOHRE complaint letter

Jurisdiction

🇦🇪 United Arab Emirates

Private sector (mainland)

Most free zones

On this page

  1. 01What is gratuity?
  2. 02Federal Decree-Law No. 33 of 2021 overview
  3. 03Who is eligible?
  4. 04Basic salary used for gratuity
  5. 05Calculation formula explained
  6. 06Resignation vs termination
  7. 07Continuous service requirements
  8. 08Free zone and DIFC/ADGM rules
  9. 09Common legal misconceptions
  10. 10Worked calculation examples
  11. 11Frequently Asked Questions
  12. 12Official legal references & methodology

What Is Gratuity?

Gratuity — also called end-of-service gratuity or end-of-service benefit — is a statutory payment that UAE private sector employers must make to employees at the end of their employment. It is not a bonus or a discretionary payment: it is a legal entitlement.

The payment is calculated on the employee's basic salary and the number of years worked. Employees who leave after one year receive it regardless of whether they resigned or were terminated — an important change introduced by the current labour law.

📋

Statutory right

Gratuity is not an employer policy — it is a legal right under Article 51 of Federal Decree-Law No. 33 of 2021. It cannot be waived in an employment contract.

💰

Based on basic salary

Only the basic salary component of your pay package counts — not allowances, bonuses, or commissions. The formula is fixed by law.

⏱

Paid within 14 days

Article 53 requires employers to settle all end-of-service entitlements within 14 calendar days of the employment end date.

Federal Decree-Law No. 33 of 2021 — Overview

Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (commonly called the UAE Labour Law or the New Labour Law) came into force on 2 February 2022, replacing the previous Law No. 8 of 1980. All private sector employment contracts in mainland UAE were required to be transitioned to the new framework by 1 February 2023.

For gratuity specifically, the new law made several significant changes from the 1980 statute. The table below summarises the key differences.

AreaOld Law (Law 8/1980)Current Law (FDL 33/2021)Impact
Contract typeLimited (fixed-term) and unlimited contractsAll contracts must be fixed-term (limited). Unlimited contracts phased out by 1 Feb 2023.High
Gratuity on resignationGraduated: 1/3 entitlement after 1–3 yrs, 2/3 after 3–5 yrs, full after 5 yrsFull entitlement from year one, identical to termination.High
Calculation baseBasic salary (unchanged)Basic salary (unchanged)None
Gratuity capNo explicit capCapped at 2 years of basic salary (Article 51(3))Medium
Payment deadlineNot explicitly codified in old law14 days from termination date (Article 53)High
MOHRE enforcementCourt-based recoveryMOHRE binding decisions up to AED 50,000 without court (FDL 9/2024)High

🏛️ Where to find the law

The full text of Federal Decree-Law No. 33 of 2021 is available in Arabic and English on the UAE Legislation Portal at uaelegislation.gov.ae. The MOHRE also publishes guidance notes at mohre.gov.ae.

UAE Gratuity Eligibility — Who Qualifies?

Article 51 of FDL 33/2021 sets out who is entitled to end-of-service gratuity. The core conditions are straightforward, but several edge cases trip up employees and employers alike.

✓ Qualifies

  • •Completed 1+ years of continuous service
  • •Private sector employee, any nationality
  • •Resigned lawfully with proper notice
  • •Terminated with or without notice (except Article 44)
  • •Fixed-term contract expired and not renewed
  • •Mutual agreement to end employment
  • •Constructive dismissal (where employer made conditions untenable)

✗ Does not qualify

  • •Less than 1 year of continuous service
  • •Dismissed for gross misconduct under Article 44
  • •Federal/public sector employees (separate scheme)
  • •DIFC employees (separate DIFC law)
  • •ADGM employees (separate ADGM regulations)
  • •Domestic workers (separate Law No. 9/2017)

⚠ Article 44 gross misconduct — limited grounds

An employer can only lawfully withhold gratuity if the termination falls under one of the specific Article 44 grounds. These are:

  • Providing false documents or information to obtain the job
  • Physical assault on the employer, a manager, or a colleague
  • Causing material damage to the employer through deliberate acts
  • Disclosing employer trade secrets causing serious harm
  • Being found guilty of a crime involving dishonesty
  • Serious breach of internal workplace policy (where explicitly prescribed in contract)

Courts scrutinise Article 44 claims carefully. Employers who cite it incorrectly to avoid paying gratuity routinely lose at MOHRE or in labour court.

Basic Salary for UAE Gratuity — What Counts?

Article 51 is explicit: gratuity is calculated on basic wage only. The UAE Labour Law defines basic wage as the pay specified in the employment contract, excluding any allowances paid in cash or kind. This is the single most litigated aspect of gratuity disputes.

Practical example: An employee earns AED 8,000 basic salary plus AED 4,000 housing allowance and AED 1,000 transport allowance per month. Their gross salary is AED 13,000, but their gratuity is calculated on AED 8,000 only. Using AED 13,000 overstates the entitlement by 62.5%.

Pay componentIncluded?Legal basis
Basic salary✓ YesArticle 51(1)
Housing allowance✗ NoExcluded as allowance
Transport allowance✗ NoExcluded as allowance
Food / meal allowance✗ NoExcluded as allowance
Telephone / mobile allowance✗ NoExcluded as allowance
Children's education allowance✗ NoExcluded as allowance
Annual performance bonus✗ NoNot fixed; excluded
Commission✗ NoVariable; excluded
Overtime pay✗ NoNot basic wage
End-of-year gratuity bonus (if any)✗ NoDiscretionary; excluded

💡 What if my contract doesn't separate basic from allowances?

Where a contract describes a single "salary" without separating components, MOHRE and UAE courts often treat the entire amount as basic salary for gratuity calculation purposes. If your payslips separately label a lower "basic" figure that does not appear in your contract, seek advice before accepting the employer's lower number — the contract wording is generally decisive.

UAE Gratuity Calculation Formula — Article 51 Explained

The formula is set out in Article 51(1) and 51(2) of Federal Decree-Law No. 33 of 2021. It operates in two stages — the first five years of service, and any period beyond five years — with a higher rate applying to longer-tenured employees.

Step 1 — Calculate your daily wage

Daily wage = (Basic monthly salary × 12) ÷ 365

Uses 365 calendar days — not 260 working days, not 22 working days per month.

Step 2 — Apply entitlement rate

First 5 years of service

21 days × Daily wage × Years

Article 51(1)(a)

Each year beyond 5

30 days × Daily wage × Extra years

Article 51(1)(b)

Step 3 — Apply cap

Total gratuity ≤ (Basic salary × 24)

Article 51(3) — maximum two years of basic salary

Days entitlement by year of service

YearRateCumulative daysAt AED 8,000 basicAt AED 15,000 basic
1 yr21 days/yr21AED 4,603AED 8,630
2 yrs21 days/yr42AED 9,205AED 17,260
3 yrs21 days/yr63AED 13,808AED 25,890
4 yrs21 days/yr84AED 18,411AED 34,521
5 yrs21 days/yr105AED 23,014AED 43,151
6 yrs30 days/yr135AED 29,589AED 55,479
7 yrs30 days/yr165AED 36,164AED 67,808
10 yrs30 days/yr225AED 49,315AED 92,466
15 yrs30 days/yr300AED 65,753AED 123,288

Daily wage: AED 8,000 basic = AED 263.01/day; AED 15,000 basic = AED 493.15/day. Figures rounded to the nearest AED.

Calculate your exact gratuity →

UAE Gratuity Rules — Resignation vs Termination

This is the area of UAE gratuity law that changed most significantly under FDL 33/2021. Understanding what the old law said — and what the new law changed — is critical for employees who worked in the UAE under contracts that predate February 2022.

ScenarioOld Law (Law 8/1980)Current Law (FDL 33/2021)
Resigned — 1 to 3 years service⅓ entitlementFull entitlement (same as termination)
Resigned — 3 to 5 years service⅔ entitlementFull entitlement
Resigned — 5+ years serviceFull entitlementFull entitlement
Terminated with noticeFull entitlementFull entitlement
Terminated without notice (arbitrary)Full entitlement + compensationFull entitlement + compensation (Article 47)
Article 44 gross misconduct dismissalEntitlement forfeitedEntitlement forfeited
Fixed-term contract not renewedDepended on contract typeFull entitlement

✓ The practical takeaway for most employees in 2026

All contracts in UAE private sector mainland employment should now be on the FDL 33/2021 framework. If you resigned after at least one year of service, you are entitled to full gratuity. The old graduated reduction rules for resignation no longer apply unless you are still on an unconverted old-law contract — which is increasingly rare and should have been transitioned.

📄 Need to claim your gratuity after resignation?

See the End of Service Gratuity Demand Letter tool to generate a formal Article 51 demand letter with your calculated amount.

UAE Labour Law — Continuous Service Requirements

Gratuity is calculated on continuous service with the same employer. Several situations affect how continuous service is counted or interrupted.

✓

Probation period is included

Service for gratuity purposes starts from your employment commencement date. The probation period — typically up to 6 months — is part of your total service length, not excluded from it.

✓

Maternity and sick leave count

Statutory maternity leave (60 days under Article 30) and sick leave (90 days under Article 31) are counted as continuous service for gratuity purposes. These periods do not break continuity.

⚠

Unpaid leave may be excluded

Extended unpaid leave periods (beyond statutory entitlements) may or may not be counted in service length depending on the employment contract terms. Check the specific contract clause.

✓

Change of employer ownership — service continues

If a business is sold or transferred and you continue employment, your service period with the previous owner typically carries over. The new owner inherits the gratuity liability unless otherwise settled at the time of transfer.

→

Partial years are pro-rated

If your service is 3 years and 8 months, your gratuity is calculated on 3 full years plus 8/12 of a year's entitlement. Partial years are not rounded up or down — they are calculated proportionally.

UAE Free Zone Gratuity Rules — DIFC, ADGM, and Others

The UAE has over 40 free zones, each operating under its own licensing authority. Most apply the federal gratuity rules; two major financial free zones — DIFC and ADGM — have their own employment frameworks with separate gratuity-equivalent provisions.

Entity / Free ZoneApplicable lawGratuity frameworkNotes
UAE Mainland (all sectors)FDL 33/2021Article 51 — 21 days/30 days formulaCalculator above applies directly
JAFZA (Jebel Ali Free Zone)FDL 33/2021Federal gratuity rulesStandard formula applies
DMCC (Dubai Multi Commodities Centre)FDL 33/2021Federal gratuity rulesStandard formula applies
DAFZA, DWTC, DAFZA and other Dubai FZsFDL 33/2021Federal gratuity rulesStandard formula applies
KIZAD, Masdar City, TWOFOUR54 (Abu Dhabi)FDL 33/2021Federal gratuity rulesStandard formula applies
DIFC (Dubai International Financial Centre)DIFC Employment Law No. 4 of 2021Separate end-of-service schemeDifferent formula and dispute resolution (DIFC courts)
ADGM (Abu Dhabi Global Market)ADGM Employment Regulations 2019Separate end-of-service schemeADGM courts handle disputes; check ADGM regulations

Free zone regulations change periodically. Always verify with your specific free zone authority or a UAE employment lawyer if you are unsure which framework applies to your contract.

Common UAE Gratuity Law Misconceptions

These are the most frequently misunderstood rules — by both employees and employers.

✗

Myth

Resignation means you lose your gratuity

✓

Reality

Under FDL 33/2021 (contracts from Feb 2022), resignation gives you the same full gratuity as termination. The old graduated reduction rules no longer apply to these contracts.

Legal basis: Article 51, FDL 33/2021

✗

Myth

Gratuity is calculated on your full monthly salary

✓

Reality

Only basic salary counts. Housing allowance, transport, food, bonuses, and commissions are all excluded. Using gross salary overstates the entitlement.

Legal basis: Article 51(1), FDL 33/2021

✗

Myth

Probation period is not counted towards gratuity

✓

Reality

Service for gratuity purposes runs from the employment start date, including probation. A 6-month probation that converts to employment still counts in the total service period.

Legal basis: Article 51, FDL 33/2021

✗

Myth

You need to go to court to recover unpaid gratuity

✓

Reality

For claims up to AED 50,000, MOHRE can now issue directly enforceable payment orders without court involvement, under Federal Decree-Law No. 9 of 2024.

Legal basis: FDL 9/2024

✗

Myth

Employers can withhold gratuity for any reason they choose

✓

Reality

Gratuity can only be forfeited if an employee is terminated under Article 44 (gross misconduct, specific grounds). Employers cannot unilaterally withhold it for notice period disputes, performance issues, or other reasons.

Legal basis: Article 44 & 51, FDL 33/2021

✗

Myth

A "no claim" letter signed at exit is legally binding

✓

Reality

Waivers of statutory gratuity entitlement signed under pressure or as a condition of receiving other dues are generally unenforceable. Courts protect employees from coerced waivers.

Legal basis: Article 65, FDL 33/2021

Worked UAE Gratuity Calculation Examples

Three examples applying Article 51 of FDL 33/2021 step by step.

Example A — 2 years, resigned

Basic: AED 10,0002 years exactlyResignation
  1. 1Daily wage = (10,000 × 12) ÷ 365 = AED 328.77/day
  2. 2Entitlement: 21 days × 2 years = 42 days
  3. 3Gratuity = 328.77 × 42 = AED 13,808

Under FDL 33/2021, identical to termination result. Old law would have paid AED 9,205 (⅔ entitlement).

AED 13,808

Example B — 6 years, terminated

Basic: AED 18,0006 yearsTermination
  1. 1Daily wage = (18,000 × 12) ÷ 365 = AED 591.78/day
  2. 2First 5 years: 21 × 5 = 105 days → 591.78 × 105 = AED 62,137
  3. 3Year 6: 30 × 1 = 30 days → 591.78 × 30 = AED 17,753
  4. 4Total = 62,137 + 17,753 = AED 79,890

Year 6 attracts 30 days per year rather than 21 — the rate increases once service exceeds 5 years.

AED 79,890

Example C — 12 years, cap check

Basic: AED 50,00012 yearsAny
  1. 1Daily wage = (50,000 × 12) ÷ 365 = AED 1,643.84/day
  2. 2First 5 years: 21 × 5 = 105 days → 1,643.84 × 105 = AED 172,603
  3. 3Years 6–12: 30 × 7 = 210 days → 1,643.84 × 210 = AED 345,206
  4. 4Calculated total = AED 517,809
  5. 5Cap: 2 × (50,000 × 12) = AED 1,200,000 — cap not triggered
  6. 6Payable: AED 517,809

The 2-year cap = AED 1.2M here, so no reduction. The cap typically only bites at 15+ years on very high salaries.

AED 517,809
Use the full gratuity calculator →

UAE Gratuity Law — Frequently Asked Questions

What is UAE gratuity law?▾
UAE gratuity law is codified in Article 51 of Federal Decree-Law No. 33 of 2021. It entitles private sector employees who complete at least one year of continuous service to an end-of-service payment calculated on basic salary — 21 days per year for the first five years, and 30 days per year for each year beyond five.
Who is eligible for gratuity in UAE?▾
Any employee in UAE private sector mainland employment who completes at least one year of continuous service, of any nationality. Employees dismissed for gross misconduct under Article 44 may forfeit their entitlement. DIFC and ADGM employees are governed by separate frameworks.
What changed under the new UAE Labour Law (FDL 33/2021)?▾
The key change for gratuity: resignation no longer reduces entitlement. Under the old Law No. 8 of 1980, employees who resigned in the first five years received reduced gratuity (⅓ or ⅔). Under FDL 33/2021, resignation gives identical gratuity to termination from year one. Unlimited contracts were also abolished.
Does resignation affect gratuity under the new UAE law?▾
No. Under FDL 33/2021, employees who resign receive full gratuity from year one — the same as if they were terminated. The old graduated reduction (⅓ entitlement for 1–3 years, ⅔ for 3–5 years) no longer applies to contracts from February 2022 onwards.
Which salary is used to calculate UAE gratuity?▾
Basic salary only — the fixed monthly wage in the employment contract, excluding all allowances (housing, transport, food, phone), bonuses, and commissions. Article 51 explicitly states that only the basic wage is used.
Is there a gratuity cap under UAE law?▾
Yes. Article 51(3) caps total gratuity at the equivalent of two years of basic salary (24 monthly basic salaries). This typically only applies to employees with very long service or very high basic salaries.
When must an employer pay gratuity in UAE?▾
Within 14 calendar days of the employment termination date, under Article 53 of FDL 33/2021. Late payment entitles the employee to file a MOHRE complaint. MOHRE can issue binding payment orders for claims up to AED 50,000 under FDL 9/2024.
Can an employer withhold gratuity in UAE?▾
Only in two situations: a lawful Article 44 gross misconduct dismissal (specific statutory grounds), or offsetting a written loan agreement the employee signed. Arbitrary withholding for notice period disputes, poor performance, or "company policy" is unlawful.
Does UAE gratuity law apply to free zone employees?▾
Most UAE free zones (JAFZA, DMCC, DAFZA, KIZAD, etc.) apply the federal gratuity rules under FDL 33/2021. DIFC and ADGM have separate employment frameworks. Always check your employment contract and the applicable free zone regulations.
What is the MOHRE complaint process for unpaid gratuity?▾
File a complaint via the MOHRE app, mohre.gov.ae, or call 600590000 using UAE Pass. MOHRE will attempt mediation for up to 14 days. For claims up to AED 50,000, MOHRE can issue a directly enforceable payment order under FDL 9/2024. Larger claims are referred to the competent labour court.
Does UAE gratuity apply to domestic workers?▾
Domestic workers are covered by a separate law — Federal Decree-Law No. 9 of 2017. Under that law, they are entitled to one month's wage per year of service after one year of continuous employment, payable within 14 days of the contract end.

Official Legal References & Methodology

Primary legislation

Official sources

Methodology & reviewer information

This guide was researched and written by the OfficeDraft legal and HR team, drawing on the official text of Federal Decree-Law No. 33 of 2021 as published on the UAE Legislation Portal and MOHRE guidance notes published on mohre.gov.ae. All legal provisions cited are referenced to their specific article numbers. Calculation examples were verified by independently applying the Article 51 formula to each set of inputs and cross-checking against the MOHRE gratuity guidance.

Last reviewed and updated: June 2026. Reviewer: OfficeDraft UAE Employment Law Specialist. Jurisdiction: United Arab Emirates — private sector mainland employment.

Disclaimer: This guide provides general legal information for employees, HR professionals, and employers. It is not legal advice and does not create a lawyer-client relationship. For individual disputes, contested calculations, DIFC or ADGM employment, or Article 44 dismissal cases, consult a UAE-licensed employment lawyer.

About This Guide

🏛️

Legally verified

Every rule in this guide is cited to the specific article of Federal Decree-Law No. 33 of 2021 or relevant implementing regulation. No speculation or unsourced legal claims.

🔄

Updated June 2026

Reflects the current law as in force, including FDL 9/2024 enforcement powers, the full contract transition to fixed-term format, and current MOHRE complaint procedure.

⚠️

Not legal advice

This guide provides general legal information. For individual disputes, dismissed-for-cause cases, DIFC/ADGM employment, or contested calculations — consult a UAE-licensed employment lawyer.

External references: UAE Legislation Portal · MOHRE · UAE Government · ADJD Abu Dhabi · Dubai Courts

Related UAE Employment Tools & Guides

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UAE Gratuity Calculator

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Gratuity Calculator + Demand Letter

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End of Service Gratuity Demand Letter (UAE)

Generate an Article 51 demand letter citing MOHRE escalation

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MOHRE Complaint Letter Generator

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Gratuity Demand Letter — Abu Dhabi

Abu Dhabi specific: MOHRE + ADJD process and demand letter

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Gratuity Demand Letter — Dubai

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End of Service Demand Letter Generator

Full end-of-service package: gratuity, wages, and leave balance

Ready to calculate or claim your gratuity?

Use the free calculator for your AED entitlement, or generate a formal demand letter with Article 51 and Article 53 citations if your employer has not paid.

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Article 51 FDL 33/2021 · MOHRE escalation language · Updated June 2026