How to calculate gratuity amount in the UAE: the figure earned so far, month by month, on one basic salary
The UAE gratuity amount is the last basic salary divided by 30, times 21 days a year for five years and 30 days after, pro-rata by day, capped at two years' wage. Worked on an AED 7,500 basic as a month-by-month running figure, an exact leaving date with unpaid leave, and a part-time contract.
A basic salary of AED 7,500 earns AED 437.50 of gratuity for every month worked in the first five years, and AED 625 a month after that. That is the gratuity amount in the UAE reduced to a running figure, and it comes straight from the formula in Article 51 of Federal Decree-Law 33 of 2021: take the last basic salary, divide by 30 for a daily rate, pay 21 days of it for each of the first five years and 30 days for each year after, count parts of a year in proportion, leave out unpaid days of absence, and stop at two years' wage. My earlier posts work that formula at the exit. This one works it as a figure that exists on any given day.
How is the gratuity amount calculated in the UAE?
Article 51(2) of Federal Decree-Law 33 of 2021, the text MOHRE publishes, sets the entitlement for a full-time foreign worker who has completed a year or more of continuous service: "a wage of (21) twenty-one days for each year of the first five years of service" and "a wage of (30) thirty days for each year exceeding such period", calculated on the basic wage. Article 51(5) fixes which basic wage: "the last basic wage the worker was entitled to." Article 51(6) adds that the whole benefit "does not exceed two years' wage."
The basic wage is defined in Article 1 as the wage in the contract paid for the work, which "does not include any other allowances or benefits in-kind". Housing, transport and commission never enter the sum. I have a separate post on what that split does to the number, so here I take the basic as given.
On AED 7,500 the arithmetic is short:
| step | working | result |
|---|---|---|
| daily rate | 7,500 ÷ 30 | AED 250 |
| one year in years 1 to 5 | 21 × 250 | AED 5,250 |
| one year from year 6 | 30 × 250 | AED 7,500 |
| cap, two years' wage | 24 × 7,500 | AED 180,000 |
The cap on this salary is reached at 25.5 years, so for most contracts it never moves the result. The tiers do.
How much gratuity have I earned so far, month by month?
Divide the yearly figures by twelve and the formula becomes a monthly one: AED 437.50 for each month of the first sixty, AED 625 for each month after. Divide by 365 instead and it is AED 14.38 for each day in the first five years. Here is the running figure on AED 7,500:
| service completed | gratuity accrued |
|---|---|
| 6 months | AED 0 (nothing vests before one year) |
| 12 months | AED 5,250 |
| 18 months | AED 7,875 |
| 3 years | AED 15,750 |
| 5 years | AED 26,250 |
| 6 years | AED 33,750 |
| 8 years | AED 48,750 |
| 10 years | AED 63,750 |
Two rows are easy to misread. The first is not a rounding: Article 51(2) requires a year or more of continuous service, and Article 51(3) grants the pro-rata part "provided that he completed one year of continuous service." At eleven months the figure is zero, at twelve it is the full AED 5,250.
The rest of the table assumes the basic never changes. Article 51(5) prices every year at the last basic, so a raise re-prices the whole history, not just the months after it. If the AED 7,500 becomes AED 8,100 in the fourth year, a worker leaving at three years and 226 days moves from AED 19,000.68 to AED 20,520.74. Every earlier month is paid at the new rate.
Gratuity is not a balance that grows quietly in the background. It is one multiplication done on the last day, using the last basic and every counted day of service.
How is the amount worked out for an exact leaving date, with unpaid leave?
Take a contract that started on 10 March 2023 and ends on 21 October 2026. That is three full years plus 226 days, counting both ends. Article 51(3) says parts of a year are paid "in proportion to the period spent at work", so the fraction is counted in days:
- three full years: 3 × 5,250 = AED 15,750
- 226 days: 226 ÷ 365 × 5,250 = AED 3,250.68
- gratuity: AED 19,000.68
Now add 20 days of unpaid leave taken during that time. Article 51(4) is one sentence: "The unpaid days of absence from work shall not be included in the calculation of the service term." The 226 becomes 206, the fraction becomes AED 2,963.01, and the gratuity is AED 18,713.01. Twenty unpaid days cost AED 287.67, the daily accrual rate times twenty. Paid annual leave and paid sick leave are not absence in this sense and stay in the count.
Two more articles touch the amount actually received. Article 51(7) lets the employer deduct "any amounts payable under the law or a judgment", with the cases listed in Article 29 of Cabinet Resolution 1 of 2022: loans, overpayments, approved penalties, court debts and damage caused by the worker's fault. Article 53 sets the deadline: wages and all other entitlements are paid "within (14) fourteen days from the end date of the contract term."
How is gratuity calculated on a part-time contract?
The same formula runs first, then a percentage is applied. Article 30 of Cabinet Resolution 1 of 2022 gives the mechanism: the working hours in the contract per year, divided by the hours in a full-time contract per year, multiplied by 100, gives the percentage on which the benefit is calculated, and that percentage is applied to "the value of the end of service benefit due for the full-time employment contract." Article 18 of the Decree-Law puts normal full-time hours at eight a day or 48 a week.
So a 24-hour-a-week contract on the same AED 7,500 basic, the same dates and the same 20 unpaid days is 24 ÷ 48 = 50%, and the gratuity is half of AED 18,713.01: AED 9,356.51. The resolution also closes one door: the benefit "shall not apply in the case of temporary employment with a duration of less than one year."
Is the gratuity amount calculated the same way in other countries?
The same search sits beside questions about Zambia, India and the rest of the Gulf, and only the method travels. Every statute sets its own day count, wage base, cap and view of resignation. India, for instance, uses a 15-day and 26-day fraction that I have worked separately. The order of operations is what carries over: a daily rate, a count of service days, the tiers, then the cap. The studio's eight-country gratuity workbook does nothing cleverer than hold those four steps on one tab per country, with the article references beside them.
What the month-by-month view adds is a sense of scale. On AED 7,500, one month of service in the first five years is worth AED 437.50 of gratuity, and one day is worth AED 14.38. A leaving date pulled forward a week, or twenty days of unpaid leave, moves the figure by amounts visible in advance. The raise is the only input that reaches backwards.
Sources
- Federal Decree-Law No. (33) of 2021 Regarding the Regulation of Employment Relationships and its amendments, with Cabinet Resolution No. (1) of 2022 (consolidated edition) · Ministry of Human Resources and Emiratisation (MOHRE)
- End of service benefits for workers in the private sector · The United Arab Emirates' Government portal (u.ae)
