Gratuity calculation UAE: basic salary and examples (2026)

UAE gratuity for an eligible foreign full-time private-sector worker uses the last basic salary: 21 days per year for the first five years and 30 days per year thereafter, after at least one continuous year. This is the traditional scheme, as verified on 17 October 2026. UAE Government end-of-service guidance.

Source: withlida.com, 17 October 2026, from the UAE Government's current guidance and Articles 51 and 67 of the government-hosted English law text. The English PDF is labelled an unofficial translation. Eligible service excludes unpaid absence; qualifying fractions are explained below.

Last verified: 17 October 2026. Checked by the publication's independent check, 17 October 2026.

The legal rules in this guide are verified as of October 2026. The UAE Government page displays an update date of 15 October 2026; that page stamp alone does not establish a new law. Its current guidance anchors this explanation, with the law's article references supplying the underlying provisions.

Is gratuity based on basic or total salary?

Traditional gratuity uses the last basic salary, excluding allowances such as housing, transport, utilities and furniture, according to the UAE Government guidance, verified October 2026. Basic salary is the contractual wage component before those allowances are added.

The following package is entirely hypothetical. It supplies the same wage inputs for every worked example below.

Source: withlida.com, 17 October 2026. All salary amounts are assumptions; AED 6,000 + AED 3,000 + AED 1,000 = AED 10,000. Exclusion rule: UAE Government, as of October 2026.

The relevant comparison is between the last basic wage recorded for the employment and the employer's settlement calculation. A bank credit for the combined package does not, by itself, identify the basic component.

How long must employment last?

At least one year of continuous service is required for this traditional gratuity, including exactly one completed year. Service below that threshold does not attract gratuity under this provision. These are the conditions in the UAE Government guidance, as of October 2026.

Continuous service means uninterrupted service with the same employer or its legal successor from the start of work, in Article 1 of the government-hosted English text, read October 2026. Years spent with unrelated employers cannot simply be combined into one gratuity calculation.

Once that continuous-year condition is met, eligible fractions are paid proportionately. A short service period can still leave wages or other settlement items to assess; gratuity eligibility does not determine the entire final settlement.

The formula presented in the current guidance has no separate resignation multiplier. A resignation before five years uses the applicable service band shown above, subject to the worker's actual employment file. Notice obligations and any disputed entitlement require their own assessment.

How are the first five years, later years and partial years calculated?

Calculate a daily basic wage, allocate eligible service to its band, and add the bands. Article 51 supplies the service bands; Article 67 defines a month as 30 days and a year as 365 days, using the Gregorian calendar. Government-hosted English text, read 17 October 2026.

Using the assumed monthly basic salary above:

Daily basic wage = AED 6,000 ÷ 30 = AED 200.

For eligible service expressed in years, the uncapped calculation is:

Daily basic wage × [21 × the first eligible years, up to 5, + 30 × eligible years beyond 5].

This expresses the UAE Government's traditional full-time formula, as of October 2026. The total remains subject to the two years' wage cap. None of the examples below reaches that ceiling.

All examples assume an eligible foreign full-time worker, the traditional scheme, the salary split above and no deductions. Service inputs are assumptions, already adjusted for any excluded absence. These are calculations, not adjudicated entitlements.

Source: withlida.com, 17 October 2026, independently calculated from the stated assumptions. Band and proportional-fraction rules: UAE Government. Time definitions: Article 67, English text, verified October 2026.

For the seven-year example, crossing the band boundary changes the rate for the later two years. It does not reprice all seven years at the later rate. The fractional example adds an eligible part-year after the continuous-year condition has been met.

An actual file needs confirmed joining and contract-end dates, continuity and absence records. The assumed residual-day example explains the arithmetic; it does not settle disputed date counting or service eligibility.

Does unpaid absence count towards gratuity?

Days of unpaid absence are excluded from the service calculation, under the UAE Government guidance and Article 51, as of October 2026. Calendar time on the payroll and eligible service can therefore differ.

Assume the employee has already completed one eligible continuous year. A further elapsed period of 103 days contains 30 unpaid-absence days. The residual eligible period is 103 − 30 = 73 days. With the assumed AED 6,000 monthly basic salary, the result matches the fractional example: AED 200 × 21 × (1 + 73 ÷ 365) = AED 5,040.

Those absence and service figures are assumptions, calculated by withlida.com on 17 October 2026 using the exclusion and proportional-fraction rules above. The employer's leave ledger identifies which days were actually unpaid. This exclusion concerns unpaid absence, rather than every day away from the workplace.

When is payment due, and is gratuity the whole final settlement?

The employer must pay outstanding wages, other entitlements and gratuity within 14 days of contract termination, according to the UAE Government guidance, as of October 2026. Article 53 provides the legal basis. The trigger is the contract's end date, rather than a later residence-cancellation date. Government-hosted English text, Article 53.

Gratuity is the service-based component. A useful reconciliation shows the remaining items individually.

Source: withlida.com, 17 October 2026, from UAE Government settlement guidance and Articles 29, 43, 51 and 53, English text, verified October 2026. The table identifies separate categories; it assigns no assumed amount to the other settlement lines.

Article 51(7) describes deductions for amounts payable under the law or a judgment, subject to the implementing regulation's conditions and procedures. This is a qualified legal provision, rather than an unrestricted right to subtract an asserted amount. English text, read October 2026.

For a Dubai household, the distinction matters when comparing a settlement statement with rent, moving costs and ongoing bills. The cost-of-living guide separates recurring housing costs from other cash needs. A calculated gratuity figure is an estimate of one entitlement, rather than evidence that funds have been received.

The separate Dubai residence-cancellation sequence explains the employment and immigration records. A gratuity calculation alone establishes neither cancellation nor replacement residence status.

When does a different work pattern or scheme apply?

Part-time arrangements and employer enrolment in the Savings Scheme, an alternative end-of-service system funded through employer contributions, require a different calculation route. The traditional full-time table cannot be applied to every worker. UAE Government guidance, as of October 2026.

Part-time and other covered work patterns: the government guidance describes an annual-hours ratio. Divide annual working hours in the employment contract by annual hours in the full-time contract, then multiply that ratio by the corresponding full-time benefit. It attributes this method to Article 30 of Cabinet Resolution No. 1 of 2022. It also states that gratuity does not apply to temporary employment lasting less than one year. UAE Government, verified October 2026.

Savings Scheme enrolment: participating employers can enrol all employees or selected groups. For enrolled employees, monthly fund contributions replace traditional gratuity accrual for the enrolled period. The government guidance says accrued gratuity before enrolment must be calculated and settled according to law. The useful records are the enrolment date, the earlier gratuity calculation and the scheme statement. UAE Government, verified October 2026.

UAE nationals' benefits follow pension and social-security legislation. Government employment and domestic work also need their applicable regimes. A free-zone employee's governing employment framework and scheme need confirmation before using this federal example. UAE Government scope guidance; Article 3, English text, read October 2026.

Which official calculator can illustrate the result?

The Dubai Development Authority (DDA) gratuity calculator offers a sample calculation using first working day, last working day and basic salary. DDA expressly states that its results are not final or binding and have no legal merit, as verified on 17 October 2026. Official DDA calculator and disclaimer.

Its disclaimer places the tool in the context of DDA licensees and their employees. A result is an illustration within that stated scope; it does not adjudicate a different employment file.

A calculation can be reconciled through the following records:

1. Confirm the calculation route

   The contract and any scheme-enrolment record identify the employment framework, work pattern and period being calculated.

2. Match the inputs

   The last basic wage, confirmed service dates and unpaid-absence ledger supply the traditional formula's inputs. Allowances remain separately visible.

3. Reconcile the settlement

   The itemised statement separates gratuity, other entitlements and any lawful deductions. Payment records establish what has actually been received.

These are the records behind the explanation, rather than a determination of anyone's entitlement. A disputed employment file requires its own assessment by the competent employment authority or an appropriately licensed professional.

Frequently asked questions, checked 17 October 2026

Can I get gratuity if I resign after one year or before five years?

The current traditional full-time guidance requires at least one continuous year and uses 21 days of basic wage per year within the first five years. The formula above applies no separate resignation reduction schedule. The worker's scheme, service and individual file still matter. UAE Government, as of October 2026.

Can I get gratuity after two or four years of service?

Both periods fall within the first band, assuming the traditional full-time conditions are met. With this guide's assumed AED 200 daily basic wage, the calculation is AED 200 × 21 × eligible years. The four-year example gives AED 16,800 before deductions. Source: withlida.com calculation, 17 October 2026; official band rule.

How is gratuity calculated after ten years?

Assuming ten eligible years under the traditional full-time scheme, gratuity days are (21 × 5) + (30 × 5) = 255. At the assumed AED 200 daily basic wage, that is AED 51,000 before deductions, subject to the statutory cap. Source: withlida.com calculation, 17 October 2026; official formula.

Is leave salary also calculated on basic salary in the UAE?

Article 29 distinguishes leave taken during employment from payment for accrued unused leave on exit. Paragraph 9 uses basic wage for that exit payment; paragraph 6 concerns wage during annual leave. Leave pay therefore needs its own line and assessment. Government-hosted English text, read October 2026.

Change log: 2026-10-17 · First published · Official gratuity guidance, Articles 51, 53 and 67, DDA calculator scope and hypothetical calculations verified. The government page's 15 October update stamp is not treated as a legislative event.

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