Understanding UAE Gratuity: Calculating Your Final Settlement

May 7, 2026

67 min

May 7, 2026 08:31

UAE gratuity guide: How to calculate your final settlement

## Overview of UAE Gratuity

In the UAE, end-of-service gratuity is a crucial entitlement for employees concluding their contracts. Governed by the UAE Labour Law, this payment is based on the employee's last basic wage, not the total salary. Understanding how this is calculated and the factors influencing it is essential for all private-sector workers.

## Calculation Method

Gratuity is calculated as 21 days of basic wage for each of the first five years of service, and 30 days for each subsequent year. Employees must have completed at least one year of continuous service to qualify. The total gratuity cannot exceed two years' salary.

## Impact of Salary Changes

A reduction in basic salary before leaving a job can significantly affect the gratuity amount. Employees should be cautious about signing any salary reduction agreements close to their employment end date.

## Payment Timeline and Disputes

Employers are required to pay gratuity within 14 days of the contract's end. If payment is delayed, employees can file a complaint with the Ministry of Human Resources and Emiratisation. Employers cannot withhold gratuity due to disputes or dissatisfaction with performance.

## Deductions and Final Settlement

Employers may deduct amounts legally owed by the employee, such as loans or court-ordered payments. Employees should request a detailed final settlement breakdown before signing any documents confirming receipt of dues.

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