UAE Gratuity Guide 2026

Last reviewed: 23 June 2026

This guide walks you through every part of a UAE gratuity calculation in plain language. It is educational guidance, not legal advice — see our disclaimer.

UAE gratuity formula at a glance

Here is the standard UAE private-sector calculation summarised. It is general guidance — your exact figure depends on your basic salary, precise dates and work arrangement.

How to calculate gratuity in the UAE step by step

Work through these steps to estimate your own figure. For an exact, date-based result you can skip the manual math and calculate your exact estimate.

Step 1 — Find your basic salary

Gratuity is calculated on your basic salary, not your total or gross package. Look at your contract or pay slip and separate the basic component from allowances such as housing, transport and mobile. Only the basic figure is used.

Step 2 — Work out your daily wage

The daily wage is your monthly basic salary divided by 30.

Step 3 — Count your years of service

Calculate the full period from your joining date to your last working day. You must complete at least one full year to qualify. If you took unpaid leave, subtract those days, because unpaid leave is generally excluded from qualifying service.

Step 4 — Apply the 21-day and 30-day rules

• First 5 years: 21 days of basic wage for each year.
• After 5 years: 30 days of basic wage for each additional year.

Step 5 — Check the two-year cap

Total gratuity cannot exceed two years' basic wage — that is 24 months, or 720 days of basic wage. If your calculated amount is higher, it is capped at this ceiling. For most employees the cap is not reached until very long service, so it usually does not affect a standard estimate.

Step 6 — Remember what does not reduce it

UAE gratuity calculation examples

A combined example first. An employee on a basic salary of AED 6,000 who completed 7 years crosses the five-year mark, so both rates apply:

• Daily wage = 6,000 ÷ 30 = AED 200
• First 5 years = 200 × 21 × 5 = AED 21,000
• Next 2 years = 200 × 30 × 2 = AED 12,000
• Total estimated gratuity = AED 33,000 (below the two-year cap of AED 144,000)

More quick estimates across common salaries and service lengths:

These are rounded examples. Use the calculator for exact dates and unpaid-leave adjustments. For deeper worked examples see gratuity after 1 year, after 5 years, and after 10 years.

Basic salary vs gross salary

Gratuity is generally based on your basic salary, not your total gross pay. Housing, transport and mobile allowances, bonuses and commissions are usually excluded from the basic-salary base unless your contract or circumstances say otherwise. If you are unsure which figure to use, check your employment contract and, if needed, official sources or your employer's HR. Our basic salary vs gross salary page explains how to identify the right amount.

Common mistakes when calculating UAE gratuity

• Using gross salary instead of basic salary — the most common error; only basic wage counts.
• Rounding years too aggressively — part-years accrue, so exact dates give a truer figure.
• Ignoring unpaid leave — long unpaid periods may be excluded from qualifying service.
• Forgetting the two bands — the first five years are at 21 days; only years beyond five use 30 days.
• Assuming every free zone or DIFC case is the same — DIFC (DEWS) and some free zones follow their own procedures.
• Treating an estimate as a guaranteed settlement — a calculation is general guidance, not a final settlement figure.

When the calculator is better than manual calculation

Working through the formula by hand is useful for understanding how gratuity builds up. In practice, though, the calculator is quicker and more accurate when real numbers are involved:

• It uses your exact start and end dates, including part-years, rather than rounded years.
• It handles unpaid-leave adjustments and the two-rate split for you.
• It applies the cap automatically and returns a practical estimate in seconds.

When you have your dates ready, calculate your exact estimate instead of doing the math manually. For a city-specific view, see the Dubai gratuity calculator.

Frequently asked questions

Next steps

Planning to leave a job? Read about your UAE notice period and exactly how gratuity after resignation is calculated under the current rules. For quick answers see our gratuity FAQ, or browse worked examples for an AED 5,000 or AED 10,000 salary.