Gratuity Calculator UAE: Complete Guide Step By Step

Gratuity, also known as end-of-service benefits, is one of the most important rights for employees working in the United Arab Emirates (UAE). Whether you are an expat working in Dubai, Abu Dhabi, or any other emirate, understanding how gratuity is calculated can help you plan your finances when you leave a job or retire.

In this detailed guide, we will explain what gratuity is, how the UAE gratuity law works, how to calculate it manually, and how an online gratuity calculator UAE can simplify the process.

What is Gratuity in the UAE?

Gratuity is a lump sum payment that an employee is entitled to receive from their employer after completing at least one year of continuous service. It acts as a reward for the employee’s service and loyalty to the company.

It is not the same as your salary or end-of-month dues. Instead, gratuity is a severance package based on the employee’s last basic salary and years of service.

This benefit is covered under the UAE Labour Law (Federal Decree-Law No. 33 of 2021), ensuring all workers are fairly compensated after their service ends.

Who is Eligible for Gratuity in UAE?

Not every employee is entitled to gratuity. To qualify:

The employee must complete at least 1 year of service with the employer.
The employee should not be terminated for gross misconduct.
Both expats and UAE nationals working under private-sector contracts are eligible.

Government employees may follow different rules, but for most workers in the private sector, gratuity follows the same calculation formula.

Key Factors in Gratuity Calculation

Before using a gratuity calculator UAE, you need to understand the key components that affect the calculation:

Type of Contract – Fixed-term or unlimited.
- After 2022, the UAE shifted to limited contracts, but older unlimited contracts are still recognized until converted.
Last Drawn Basic Salary – Gratuity is based on your basic salary only, not on allowances (housing, transport, etc.).
Years of Service – The longer you work, the higher your gratuity.
Reason for Leaving – Whether you resign or are terminated can impact gratuity eligibility.

UAE Gratuity Calculation Formula

The UAE Labour Law specifies how gratuity should be calculated:

Less than 1 year of service → No gratuity.
1 to 5 years of service → 21 days of basic salary per year.
More than 5 years of service → 30 days of basic salary per year, after completing the first five years.

Important Note: The total gratuity amount cannot exceed the equivalent of two years’ salary.

1: Employee with 3 Years of Service

Basic Salary: AED 10,000
Gratuity: 21 days per year × 3 years
Daily Wage: 10,000 ÷ 30 = AED 333.33
Gratuity = 21 × 333.33 × 3 = AED 21,000

Example 2: Employee with 7 Years of Service

Basic Salary: AED 8,000
First 5 years: 21 days × 8,000 ÷ 30 × 5 = AED 28,000
Next 2 years: 30 days × 8,000 ÷ 30 × 2 = AED 16,000
Total Gratuity = AED 44,000

Gratuity for Resignation vs Termination

In the past, resignations used to reduce gratuity entitlement. However, under the new UAE Labour Law (effective from 2022 onwards), employees who resign are entitled to the same gratuity benefits as terminated employees, provided they meet the one-year minimum service requirement.

Why Use a Gratuity Calculator UAE?

While you can manually calculate gratuity using formulas, it is easier to use an online gratuity calculator in the UAE. These calculators allow you to enter:

Your basic salary
Your start and end dates of employment
Contract type (if needed)

The calculator instantly shows your gratuity amount, saving time and reducing errors.

Step-by-Step Guide to Using a Gratuity Calculator UAE

Open a trusted gratuity calculator website.
Enter your last basic salary (not including allowances).
Select your joining date and last working date.
Press “Calculate” to see your gratuity entitlement.

Within seconds, you’ll get an accurate estimate of what your employer should pay.

Benefits of Gratuity for Employees

Financial Security – Helps employees during the transition between jobs.
Encourages Loyalty – Motivates employees to stay longer with companies.
Retirement Support – Acts as an additional fund after years of service.

UAE Labour Law Updates You Should Know

All contracts must be limited-term contracts (maximum 3 years, renewable).
Employees are entitled to gratuity even if they resign, as long as they have completed one year of service.
Gratuity is calculated on the basic salary only.
Employers must pay gratuity within 14 days of contract termination.

Common Mistakes Employees Make in Gratuity Calculation

Including Allowances – Many employees mistakenly add housing and transport allowances.
Ignoring Partial Years – Even partial years are counted proportionally.
Not Knowing the Law – Some employees accept less gratuity because they don’t know their legal rights.
Confusing Calendar vs. Service Year – Gratuity is based on actual service duration, not just calendar years.

Manual vs Online Gratuity Calculation

Method	Pros	Cons
Manual Calculation	Transparent, you understand the process	Risk of error, time-consuming
Online Calculator	Quick, accurate, user-friendly	Dependent on correct inputs

Best Online Gratuity Calculators in UAE

Some reliable sources include:

MOHRE Website (Ministry of Human Resources and Emiratisation)
Bank and financial advisory websites
Independent gratuity calculator tools

FAQs About UAE Gratuity

Q1: Do I get gratuity if I work less than 1 year?
No, gratuity applies only after completing 12 months of service.

Q2: Is gratuity calculated on gross salary or basic salary?
Only on basic salary, not including allowances.

Q3: Can an employer refuse to pay gratuity?
No, it is a legal right. Employers must pay within 14 days of termination.

Q4: What happens if I resign during probation?
Employees resigning during probation are not entitled to gratuity.

Q5: Can gratuity be more than two years of salary?
No, the UAE Labour Law caps gratuity at two years’ salary maximum.

Final Thoughts

The gratuity calculator UAE is a powerful tool for employees who want to know their end-of-service benefits without dealing with complex manual formulas. Since gratuity is a legal right under the UAE Labour Law, every employee needs to understand how it works.

Whether you are planning to change jobs, retire, or simply want to check your benefits, using a gratuity calculator UAE ensures you are aware of what you are entitled to receive. Always verify calculations, know your rights, and never hesitate to raise concerns with the Ministry of Human Resources and Emiratisation (MOHRE) if you face any disputes.

With proper knowledge and the right tools, you can leave your job in the UAE with financial confidence and security.

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