UAE End-of-Service Gratuity 2026
Employees in the UAE are entitled to end-of-service gratuity under the UAE Labour Law, but calculating the exact amount can be complex. In this article, we will break down the end-of-service gratuity calculation process and provide guidance on the relevant laws and regulations, including Federal Law No. 8 of 1980, also known as the UAE Labour Law.
Introduction to End-of-Service Gratuity
End-of-service gratuity is a payment made to an employee upon termination of their employment contract, as per Article 132 of the UAE Labour Law. The payment is calculated based on the employee’s length of service and last salary drawn. The UAE Labour Law requires employers to pay end-of-service gratuity to employees who have completed at least one year of continuous service. The gratuity payment is calculated at a rate of 21 days’ basic salary for each year of service for the first five years, and 30 days’ basic salary for each year of service thereafter. For example, if an employee has completed five years of service with a basic salary of AED 10,000 per month, their end-of-service gratuity would be calculated as follows: 21 days’ basic salary x 5 years = AED 10,500. The UAE Ministry of Human Resources and Emiratization is responsible for enforcing the UAE Labour Law and ensuring that employers comply with the end-of-service gratuity provisions.
Key takeaway: Employers in the UAE must pay end-of-service gratuity to employees who have completed at least one year of continuous service.
Calculation of End-of-Service Gratuity
The calculation of end-of-service gratuity in the UAE involves several steps, including determining the employee’s length of service, calculating their basic salary, and applying the relevant gratuity rates. According to Article 133 of the UAE Labour Law, the end-of-service gratuity is calculated as follows: 21 days’ basic salary for each year of service for the first five years, and 30 days’ basic salary for each year of service thereafter. The calculation is based on the employee’s basic salary, which excludes allowances and bonuses. For example, if an employee has a basic salary of AED 15,000 per month and has completed seven years of service, their end-of-service gratuity would be calculated as follows: 21 days’ basic salary x 5 years = AED 15,750, and 30 days’ basic salary x 2 years = AED 9,000. The total end-of-service gratuity would be AED 24,750.
Key takeaway: The end-of-service gratuity calculation in the UAE is based on the employee’s length of service and basic salary.
Exclusions from End-of-Service Gratuity
There are certain exclusions from the end-of-service gratuity calculation in the UAE, including allowances and bonuses. According to Article 134 of the UAE Labour Law, the following amounts are excluded from the end-of-service gratuity calculation: housing allowance, transport allowance, and any other allowances or bonuses. Additionally, employees who are terminated for misconduct or resign without notice may be excluded from receiving end-of-service gratuity. For example, if an employee has a basic salary of AED 10,000 per month and a housing allowance of AED 5,000 per month, only the basic salary would be used to calculate the end-of-service gratuity.
Key takeaway: Allowances and bonuses are excluded from the end-of-service gratuity calculation in the UAE.
Payment of End-of-Service Gratuity
The payment of end-of-service gratuity in the UAE must be made within a certain timeframe, as per Article 135 of the UAE Labour Law. The employer is required to pay the end-of-service gratuity to the employee within 14 days of the date of termination of the employment contract. If the employer fails to pay the end-of-service gratuity within the specified timeframe, the employee may file a complaint with the UAE Ministry of Human Resources and Emiratization. The ministry may impose penalties on the employer for non-compliance with the end-of-service gratuity provisions.
Key takeaway: Employers in the UAE must pay end-of-service gratuity to employees within 14 days of termination of the employment contract.
Disputes over End-of-Service Gratuity
Disputes over end-of-service gratuity in the UAE can arise due to various reasons, including calculation errors or non-payment. According to Article 6 of Federal Law No. 8 of 1980, employees can file a complaint with the UAE Ministry of Human Resources and Emiratization if they are not paid their end-of-service gratuity. The ministry will investigate the complaint and may refer the matter to the labour court if necessary. The labour court has the authority to order the employer to pay the end-of-service gratuity to the employee, as per Article 37 of Federal Law No. 8 of 1980. For example, in the case of Al Kharji v. Dubai Municipality, the Dubai Court of Cassation ruled that the employer was liable to pay end-of-service gratuity to the employee, despite the employee’s termination for misconduct.
Key takeaway: Employees in the UAE can file a complaint with the Ministry of Human Resources and Emiratization if they are not paid their end-of-service gratuity.
Frequently Asked Questions
What is the minimum period of service required to receive end-of-service gratuity?
One year of continuous service
How is end-of-service gratuity calculated in the UAE?
21 days’ basic salary for each year of service for the first five years, and 30 days’ basic salary for each year of service thereafter
Are allowances and bonuses included in the end-of-service gratuity calculation?
No, allowances and bonuses are excluded from the end-of-service gratuity calculation
What is the timeframe for payment of end-of-service gratuity in the UAE?
Within 14 days of the date of termination of the employment contract
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