UAE Gratuity Rules 2025
Everything you need to know about End of Service Benefits
The New Labor Law
The UAE Labor Law underwent a major overhaul with the introduction of Federal Decree-Law No. 33 of 2021. This law unified the rules for the private sector, abolishing the distinction between "Limited" and "Unlimited" contracts for the purpose of gratuity calculation.
Key Rule: Article 51
Article 51 specifically outlines the entitlement to End of Service Gratuity:
- Eligibility: An employee who has completed one year or more of continuous service is entitled to gratuity.
- Calculation Basis: Gratuity is calculated on the Basic Salary only. Allowances are excluded.
- Deductions: Days of unpaid leave are deducted from the service period.
Resignation vs. Termination
Under the old law, resigning often meant a reduction in gratuity (e.g., 1/3 or 2/3 reduction). Under the new law, this reduction has been removed for most cases, provided the employee completes the contract term or gives proper notice.
The 21/30 Rule
The standard calculation is now:
- 21 Days of basic salary for each of the first 5 years.
- 30 Days of basic salary for each additional year.