How gratuity is calculated
Article 51 of Federal Decree-Law No. 33 of 2021, step by step, with the arithmetic shown at each stage so you can check any figure you are given.
The rule
| Service | Per year |
|---|---|
| Each of the first five years | 21 days' basic wage |
| Each year after the fifth | 30 days' basic wage |
| Under one year | No entitlement |
| Maximum total | Two years' wage |
The four steps
1. Establish the daily basic wage
Monthly basic divided by 30. This is the convention used throughout UAE practice, and it is what makes 21 days read as 0.7 of a month.
daily basic = monthly basic ÷ 30
2. Establish the service period
From the first working day to the last, in calendar days, less any days of unpaid absence. Convert to years by dividing by 365. Do not round to whole years — part years are paid pro rata.
3. Count the entitlement in days
days = min(years, 5) × 21 + max(0, years − 5) × 30
4. Multiply, then apply the ceiling
Days × daily basic. If the result exceeds two years' wage, it is capped there. The cap begins to bite at around 25 years and 6 months of service, so most people never reach it.
Three worked examples
Three years, 8,000 AED basic
- Daily basic = 8,000 ÷ 30 = 266.67 AED
- 3 × 21 = 63 days
- 63 × 266.67 = 16,800 AED — 2.1 months of basic
Seven years six months, 10,000 AED basic
- Daily basic = 333.33 AED
- First five years: 5 × 21 = 105 days
- Remaining 2.5 years: 2.5 × 30 = 75 days
- 180 × 333.33 = 60,000 AED — six months of basic
Twelve years, 15,000 AED basic, 45 days of unpaid leave
- Service = 4,380 − 45 = 4,335 days = 11.877 years
- First five: 105 days. Remaining 6.877 years: 206.3 days
- 311.3 × 500 = 155,650 AED
- Without the unpaid leave it would have been 157,500 — the 45 days cost 1,850 AED
What is not in the formula
Gratuity is one line in a final settlement. These are separate and are not part of Article 51:
- Unused annual leave, paid at basic wage
- Notice pay where notice was not worked
- Outstanding wages, overtime and commission
- Repatriation air fare, where the contract provides one
- Compensation for arbitrary dismissal — a separate claim of up to three months' wage
All of it, gratuity included, is payable within 14 days of the employment ending.
Work backwards. Divide the gratuity offered by your daily basic wage to get the number of days, then compare against step 3. If the days are short, the disagreement is about your service period or your basic wage — not about the formula. That tells you which document to ask for.
Related
- What counts as basic salaryWhere most disputes actually start
- The service periodWhat counts and what breaks continuity
- Resignation and terminationWhy resigning no longer costs you anything
Reviewed 2026-09-19 against Federal Decree-Law No. 33 of 2021. General guidance, not legal advice — see the disclaimer.