UAE End of Service Gratuity Calculator
UAE labour law gives an employee on an unlimited or limited contract a statutory end of service gratuity once they complete one year. This calculator applies the standard 21 day and 30 day bands to basic salary and shows the cap. Use it for exit settlements and for the gratuity provision on your balance sheet.
Your numbers
Basic salary only. Housing, transport and other allowances are normally excluded from the gratuity base.
Total service in years, net of any unpaid leave periods that the contract or law excludes.
Used to estimate the additional gratuity you would accrue if the employee stays this much longer.
Your results
Estimate for UAE mainland employees under Federal Decree-Law 33 of 2021. Free zones such as DIFC and ADGM have their own schemes, and contracts may be more generous. Confirm with HR counsel or MOHRE before paying out.
Gratuity by years of service
Sweeps Completed service from 1 to 25, holding your other inputs fixed.
Automate gratuity accruals from your ERP
An optional review of how to pull hire dates and basic pay into a monthly gratuity accrual.
Optional. The tool and every export work without this. No spam.
How the gratuity is calculated
The base is the last basic salary, not total pay. The daily wage is basic divided by 30. For each of the first five years of service the employee earns 21 days of wages, and for each year after that 30 days. Partial years are pro rated. The total is capped at two years of salary. Service under one year earns nothing. The calculator reproduces exactly this sequence so you can check each band separately and see which one drives the number.
- Daily wage = basic salary / 30
- Years 1 to 5: 21 days x years x daily wage
- Years above 5: 30 days x years x daily wage
- Cap: 24 x monthly basic salary
Worked example
A machinist on AED 8,000 basic with 7.5 years of service has a daily wage of about AED 266.67. The first five years give 21 x 5 x 266.67, roughly AED 28,000. The remaining 2.5 years give 30 x 2.5 x 266.67, roughly AED 20,000. The total is about AED 48,000, well under the AED 192,000 cap. The second primary output shows what the liability becomes if the person stays another 12 months, which is the number finance needs for year end accruals.
Provisioning and ERP notes
Most manufacturers accrue gratuity monthly rather than at exit. In SAP, Oracle, Dynamics or SyteLine this is usually a payroll or general ledger accrual keyed to employee master data, so the basic salary and hire date fields must be clean. Re-run this sweep whenever salary bands change. The chart shows how the liability grows faster after year five, which matters for plants with a long-serving workforce.
Common mistakes
Teams often use gross salary instead of basic, count unpaid leave as service, or forget the cap for very long service. Another frequent error is applying 30 days from year one. Resignation before three years under the old rules reduced entitlement, but check the current text and your contract, since this tool shows the full statutory amount.
- Do not include allowances unless the contract defines them as basic
- Remove unpaid leave beyond the permitted period
- Check free zone rules separately
Frequently Asked Questions
Is gratuity calculated on total salary or basic salary?
Normally basic salary only. Allowances such as housing, transport or overtime are excluded unless your contract defines them as part of basic. Always read the employment contract, because a more generous contractual base is allowed and the law sets only the minimum.
What is the maximum gratuity in the UAE?
The statutory cap is two years of salary, which this calculator models as 24 months of basic pay. Long serving employees can hit the cap, after which extra service does not raise the statutory amount.
Does it apply to free zone companies?
Not always. DIFC has its own savings scheme and ADGM has its own employment regulations. Other free zones usually follow federal law, but you should confirm the rules of your specific zone before relying on this estimate.
Is gratuity paid for less than one year of service?
No. The statutory entitlement starts after one full year of continuous service. The calculator returns zero below one year so you can see the threshold clearly.
Netray can read hire dates and basic pay from your ERP or HR system and produce a gratuity accrual report on your own servers. Ask for a review if your provision is still built by hand in Excel.
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