UAE Labour Law & End of Service Benefits
An accessible overview of the rules that shape gratuity for private-sector employees in the UAE.
Last reviewed: 19 June 2026
End of Service Benefits (EOSB)
End of Service Benefits — commonly called gratuity — is a statutory lump sum payable to eligible private-sector employees when their employment ends. It rewards length of service and is calculated from the employee's basic salary.
Eligibility
- At least one full year of continuous service is required.
- Applies to private-sector employees under the federal labour law.
- Both resignation and termination can qualify, subject to lawful conduct.
The current contract framework
Following reforms that took effect in early 2022, UAE private-sector employment moved to a single fixed-term contract model. The previous distinction between "limited" and "unlimited" contracts — and the resignation-based gratuity reductions attached to unlimited contracts — no longer applies to standard current-law calculations.
Do not use outdated reduction rules
Older online calculators often reduce gratuity to one-third or two-thirds for resignation under "unlimited" contracts. These rules are historical and should not be applied to current standard private-sector calculations.
The calculation formula
| Component | Rule |
|---|---|
| Basis | Basic salary only (allowances excluded) |
| Daily wage | Monthly basic salary ÷ 30 |
| First 5 years | 21 days of basic wage per year |
| After 5 years | 30 days of basic wage per year |
| Minimum service | 1 year (less than 1 year = no gratuity) |
| Maximum | Capped at 2 years' basic wage |
Resignation vs termination
Under the current formula, the gratuity amount is the same whether the employee resigns or is terminated lawfully — both use the 21/30-day calculation. Separate rules govern notice periods, unpaid dues and cases of dismissal for gross misconduct, which can affect entitlement in specific situations.
Unpaid leave
Periods of unpaid leave are generally not counted as qualifying service. When estimating, deduct unpaid leave days from your total service so the figure reflects only paid, qualifying time.
Free zones: DIFC and ADGM
Most free zones broadly mirror federal end-of-service principles, but the financial free zones operate their own employment laws:
- DIFC introduced a workplace savings scheme (DEWS) that replaced the traditional end-of-service lump sum for many employees.
- ADGM has its own employment regulations governing end-of-service entitlements.
If you work in one of these zones, your entitlement may be structured differently from the standard mainland formula.
Domestic workers
Domestic workers are covered by a separate law rather than the standard private-sector labour law, with its own end-of-service provisions. The general calculator on this site is designed for standard private-sector employment.
Verify before you rely on a figure
Regulations and official guidance can change. Always confirm your specific entitlement through official UAE government channels, your employment contract, and qualified professional advice.
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