UAE End of Service Gratuity: Complete Guide
What Is Gratuity?
End of service gratuity (often called "EOSB" or just "gratuity") is a lump-sum payment your employer owes you when you leave your job, mandated by UAE Federal Decree-Law No. 33/2021. Think of it as the UAE's alternative to a pension for private-sector expat workers. Since expats don't participate in the national pension scheme, gratuity serves as your primary employment-linked savings. It's calculated based on your basic salary and length of service — not your total package.
When Are You Entitled?
You're entitled to gratuity after completing at least 1 year of continuous service. If you're terminated by your employer, you get the full calculated amount regardless of how many years you've served (as long as it's over 1 year). If you resign, different rules apply — see below. The 1-year minimum includes your probation period. Part-time and temporary workers may have different arrangements, so check your contract. Importantly, you do NOT lose gratuity rights if you're terminated due to redundancy or company restructuring.
How Is It Calculated?
The formula is straightforward: for the first 5 years, you earn 21 days' basic pay per year of service. After 5 years, it increases to 30 days' basic pay per year. The "day" is calculated as monthly basic salary ÷ 30. So if your basic salary is AED 10,000/month and you've worked 7 years: first 5 years = (10,000/30) × 21 × 5 = AED 35,000; next 2 years = (10,000/30) × 30 × 2 = AED 20,000; total = AED 55,000. The total cannot exceed the equivalent of 2 years' total remuneration.
Resignation Penalties
If you resign (rather than being terminated or reaching contract end), penalties may apply on mainland unlimited contracts: less than 1 year — no gratuity at all; 1–3 years — you get only 1/3 of the calculated gratuity; 3–5 years — you get 2/3; more than 5 years — full amount, no penalty. This is why many expats try to stay at least 5 years before moving jobs. DIFC and ADGM have their own employment laws and the resignation penalties may differ — always check your specific zone's rules.
Common Misconceptions
Several myths circulate about gratuity. First: "gratuity is calculated on total salary" — wrong, it's basic salary only. Second: "I lose all gratuity if fired for misconduct" — under Article 44, you only forfeit gratuity if dismissed under Article 44 for gross misconduct (fraud, assault, etc.), and even then you can dispute this. Third: "my employer can delay paying gratuity indefinitely" — the law requires payment within 14 days of your last working day. If they delay, file a complaint with MOHRE. Fourth: "leave salary counts differently" — your unused annual leave is paid separately and doesn't affect the gratuity calculation.
DIFC and ADGM Differences
If you work in the Dubai International Financial Centre (DIFC) or Abu Dhabi Global Market (ADGM), your gratuity follows their own employment laws, not the federal one. The key difference: these zones use calendar-day calculations (annual salary ÷ 365) instead of the mainland's (monthly salary ÷ 30). This generally results in a slightly different amount. DIFC also introduced an optional employer-funded savings plan (DEWS — DIFC Employee Workplace Savings) as an alternative to gratuity. If your employer participates in DEWS, your gratuity equivalent is invested in a fund you can track in real time.
Practical Tips
Keep records of your basic salary throughout your employment — some employers change the basic-to-allowance ratio over time, and gratuity should be calculated on the last basic salary. If you're offered a salary restructuring that lowers your basic, understand that it directly reduces your future gratuity. When leaving, request your gratuity calculation in writing before signing any final settlement. If there's a dispute, you can approach MOHRE for mediation before going to court.