# UAE Gratuity Calculator 2026: How to Calculate Your End of Service Payment
**UAE gratuity is calculated at 21 days of basic salary for each of your first 5 years of service, plus 30 days of basic salary for each year after that, and under the 2022 labour law update, you are entitled to the full amount whether you resign or are terminated.** To find your exact figure, divide your basic monthly salary by 30 to get your daily rate, multiply by the number of days earned, and you have your gratuity. This guide walks you through the precise formula, a worked example, and exactly what to do if your employer underpays.
> **Key Takeaways**
> – UAE gratuity is based on **basic salary only**, housing, transport, and other allowances are excluded from the calculation
> – The formula: 21 days per year for years 1–5; 30 days per year for year 6 onwards
> – Under Federal Decree No. 33 of 2021 (effective February 2022), **employees who resign receive full gratuity**, the old partial-payment rules no longer apply
> – Total gratuity is **capped at 2 years of total salary**
> – Domestic workers are covered under a separate legal framework but are still entitled to gratuity
–|–|
| Year 1 to Year 5 | 21 days of basic salary per year |
| Year 6 onwards | 30 days of basic salary per year |
| Maximum total cap | 2 years of gross (total) salary |
The calculation uses your **basic salary at the time of leaving**, not your salary when you joined. If you received a raise during your employment, your gratuity is based on your final, higher basic salary for the entire period of service. That is an important detail many employees miss.
**What counts as basic salary?** Only the fixed base component of your pay. Your basic salary is the number stated on your employment contract as “basic” or “basic pay.” It does not include housing allowance, transport allowance, food allowance, overtime pay, commissions, bonuses, or any other benefit, even if those items appear on your regular payslip. If your contract only states a total salary with no breakdown, the entire amount may be treated as basic salary under UAE law, which is an argument many employees successfully make in labour disputes.
The daily rate formula is straightforward: divide your monthly basic salary by 30 (not by the actual number of days in the month). UAE labour law uses a 30-day month as the standard for gratuity calculations.
**Formula summary:**
- Daily rate = Basic monthly salary ÷ 30
- Gratuity for years 1–5 = Daily rate × 21 × number of years served (up to 5)
- Gratuity for years 6+ = Daily rate × 30 × number of years served (beyond 5)
- Total gratuity = Sum of both components (capped at 2 years gross salary)
For partial years of service, you receive prorated gratuity. If you worked for 3 years and 8 months, you get gratuity for 3 full years plus 8/12 of a year’s entitlement. No UAE employer can legally deny you gratuity for a partial year, even a short period of employment creates a gratuity entitlement.
## Step-by-Step UAE Gratuity Calculation Example
Let’s work through a real example that shows how the two-tier formula works in practice.
**Employee profile**: Karim is an Egyptian civil engineer who has worked for a Dubai-based construction company for exactly 7 years. His basic monthly salary at the time of leaving is AED 10,000.
Karim had been watching his savings grow while planning his next move. He knew he was owed gratuity but had been told by a colleague that resignation would mean losing part of it. Under the old law, that was true. Under the current 2022 law, it is not. Karim is entitled to every dirham.
**Step 1: Calculate the daily rate**
Daily rate = AED 10,000 ÷ 30 = **AED 333.33 per day**
**Step 2: Calculate gratuity for years 1–5**
21 days × 5 years = 105 days
105 days × AED 333.33 = **AED 35,000**
**Step 3: Calculate gratuity for years 6–7**
30 days × 2 years = 60 days
60 days × AED 333.33 = **AED 20,000**
**Step 4: Add both amounts**
AED 35,000 + AED 20,000 = **AED 55,000 total gratuity**
| Component | Calculation | Amount (AED) |
|
## Calculate Your UAE Gratuity, Then Find Your Next Role
UAE gratuity under the 2022 law is significantly more employee-friendly than the old system. Full entitlement regardless of resignation, clearer protections for domestic workers, and a straightforward formula mean there is no reason to accept less than what you are owed. The key steps: confirm your basic salary, count your exact years and months of service, apply the 21/30-day formula, and check the result against the 2-year cap.
If you are at the stage of calculating your gratuity, you are likely planning a move. Use that momentum. [Browse UAE jobs on DrJobPro](https://drjobpro.com/jobs/uae) to see what the market is offering in your field right now, and use the [DrJobPro salary tool](https://drjobpro.com/salary) to make sure your next package reflects your experience and the current market.
Ready to take the next step? [Register on DrJobPro](https://drjobpro.com/register) to access verified job listings, set salary filters, and connect with employers who are actively hiring across the UAE.
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