The UAE gratuity rate itself is simple: 21 days’ basic salary per year of service for the first five years, then 30 days per year after that. What actually trips people up is the split calculation once you cross the five-year mark, and the difference between basic salary and total salary.
Basic salary, not total salary
Gratuity is calculated on your basic salary only — not the total on your payslip, which usually includes housing and transport allowances. If your contract lists a basic salary separately from the total, that lower figure is the one that counts. This is a different figure from the salary used for visa sponsorship thresholds, which is a common source of confusion.
Worked example 1: under five years
Basic salary AED 10,000/month, 3 years and 6 months of service.
- Daily rate: AED 10,000 ÷ 30 = AED 333.33
- Gratuity per year: 21 days × AED 333.33 = AED 7,000
- 3.5 years × AED 7,000 = AED 24,500
Worked example 2: past five years (the split)
Basic salary AED 15,000/month, 8 years of service. The first 5 years use the 21-day rate; the remaining 3 years use the 30-day rate — they don’t blend.
- Daily rate: AED 15,000 ÷ 30 = AED 500
- Years 1–5: 21 days × AED 500 × 5 = AED 52,500
- Years 6–8: 30 days × AED 500 × 3 = AED 45,000
- Total: AED 97,500
The cap that catches long-tenured employees
Total gratuity is capped at two years’ total salary, whichever calculation method applies. Most people never approach this cap, but very long service at a high basic salary can hit it — worth checking if you’re past the 15–20 year mark.
Rather than working it out by hand, the Salary & End of Service page has a live calculator that takes your exact start date, last working day and basic salary and does this automatically, including the cap check.
Last verified 4 September 2026. This covers standard federal labour law gratuity — DIFC and ADGM run separate end-of-service schemes with different rules.
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