UAE gratuity (end-of-service benefits) is set by Article 51 of Federal Decree-Law No. 33 of 2021. It is calculated on your last basic salary only — not your full package. If your contract says your salary is AED 10,000 "all-inclusive" with a basic of AED 6,000, gratuity is worked out on AED 6,000.
Step 1: daily wage = basic monthly salary ÷ 30. Step 2: count your days — 21 days for every year in the first 5 years, 30 days for every year after. Step 3: days × daily wage. Part years count in proportion. Finally, check the cap: the total can never be more than 2 years of basic salary.
Example: basic AED 6,000, 7 years of service. Daily wage AED 200. First 5 years give 105 days, the next 2 give 60 days — 165 days × AED 200 = AED 33,000.
Three common mistakes: (1) calculating on total salary instead of basic — this overstates your expectation; (2) forgetting that the old resignation reductions are gone — since 2021, resigning after 1 year pays the same as termination; (3) signing the settlement before checking. Employers must pay within 14 days of the contract ending.
Use our UAE gratuity calculator to run your exact dates and salary, then compare the breakdown line-by-line with your employer's statement.