End-of-service benefits (EOSB), also known as gratuity, are one of the most important financial rights for employees working in the UAE. Whether you’re a new employee, changing jobs, or planning to return home, knowing your gratuity amount can help you plan your finances better. This complete 800-word guide explains how the UAE gratuity calculator works, rules based on contract types, calculation formulas, payout conditions, and more—presented with easy tables and clear points.
Overview Table
| Factor | Details | Notes |
|---|---|---|
| Eligible Employees | All full-time employees completing 1 year | Part-time follows new rules |
| Basis of Calculation | Basic salary, not total salary | Allowances excluded |
| Minimum Service for Gratuity | 1 year | Less than 1 year = not eligible |
| Contract Type | Limited & Unlimited | Both covered under new UAE Labour Law |
| EOSB for Expats | Paid in full | Except in case of misconduct |
| Payment Timeline | Within 14 days after last working day | Employer obligation |
What Is End-of-Service Benefit in the UAE?
End-of-service gratuity is a lump-sum financial compensation paid to employees after they complete their employment period. It applies to all employees working under the UAE Labour Law (Private sector), including expatriates.
EOSB is calculated based on:
- Years of service
- Type of contract
- Basic monthly salary
- Reason for leaving the job
How the UAE Gratuity Calculator Works
The calculation is based on the employee’s basic salary and the number of years worked.
Formula for Calculation
- First 5 years:
21 days of basic salary per year - After 5 years:
30 days of basic salary per year - Maximum total gratuity:
Not more than 2 years’ salary
Gratuity Calculation Example
If basic salary = AED 4,000 & service = 6 years
- First 5 years:
4,000 ÷ 30 × 21 × 5 = AED 14,000 - Sixth year:
4,000 ÷ 30 × 30 = AED 4,000
Total EOSB = AED 18,000
Gratuity Eligibility Conditions
You must have completed at least 1 year of continuous service.
You are eligible if:
- Your job ends due to resignation
- Your contract ends normally
- Your employer terminates without misconduct
- You switch jobs properly with notice
You may lose gratuity if:
- You are terminated due to gross misconduct
- You leave without notice under unjustified conditions
UAE Gratuity Rules for Different Contracts
1. Limited Contract
You receive full gratuity if:
- You complete the contract term
- You resign at the end of the contract
- You are terminated without serious misconduct
2. Unlimited Contract
You receive full gratuity if:
- You complete 1+ years of service
- You resign with proper notice
- Employer terminates without valid reason
New UAE labor laws removed the earlier ⅓ and ⅔ reductions for resignation.
Gratuity Calculation Table (By Years of Service)
| Years of Service | Gratuity Entitlement |
|---|---|
| Less than 1 year | Not eligible |
| 1–5 years | 21 days basic salary per year |
| More than 5 years | 30 days basic salary for each extra year |
| Maximum payout | Not more than 2 years’ basic salary |
Important Notes About EOSB Calculation
- Calculated only on basic salary
- Unused annual leave may be added separately
- Employer must pay gratuity within 14 days
- EOSB applies regardless of nationality
- TDS, taxes, or deductions do not apply
UAE Part-Time Employee Gratuity Rules
Under the updated labour law, part-time workers also receive gratuity based on:
- Actual working hours
- Basic salary rate
- Total service duration
Formula:
(Total working hours ÷ Full-time hours) × Applicable gratuity
Documents Needed to Claim Gratuity
- Passport
- Emirates ID
- Labour contract copy
- Salary certificate (if required)
- Exit interview or clearance form
Employees leaving the UAE must also complete:
- Visa cancellation
- Labour cancellation
Step-by-Step: How to Use the UAE Gratuity Calculator
- Enter your basic monthly salary
- Add your total years & months of service
- Select contract type
- Choose the reason for leaving
- Calculator shows:
- First 5-year gratuity
- Post 5-year gratuity
- Total payout amount
Common Reasons Gratuity Gets Reduced or Blocked
- Employee commits serious violation under Article 44
- Employee resigns without notice
- Contract breach or fraud
- Not completing minimum 1 year of service
Gratuity cannot be withheld for:
- Pending tasks
- Minor issues
- Personal conflicts
- Employer’s financial problems
Gratuity for Domestic Workers in UAE
Domestic workers (drivers, housemaids, cooks, babysitters, etc.) receive:
- 14 days salary per year of service
- Full payout after completing 1 year
- Paid regardless of contract type
Frequently Misunderstood Rules
- Allowances (housing, travel, food) do not count in gratuity
- EOSB is separate from notice period salary
- Annual leave payout is additional
- Flight ticket is not legally required
Conclusion
End-of-service benefits are one of the most valuable rights for employees in the UAE. Whether you work in Dubai, Abu Dhabi, Sharjah, or any other emirate, understanding gratuity rules helps you calculate the correct amount and avoid disputes. Always check your contract, basic salary, and service years to ensure accurate EOSB calculation.
FAQs
1. How is gratuity calculated in UAE?
Based on basic salary: 21 days per year for first 5 years, 30 days per year after.
2. Who is eligible for UAE end-of-service benefits?
Anyone completing at least 1 year of service under UAE Labour Law.
3. What is the maximum gratuity an employee can receive?
Not more than 2 years’ basic salary.