New Gratuity Rules 2025
What has changed in the UAE Labor Law?
Major Changes in Gratuity
The implementation of Decree-Law No. 33 of 2021 brought significant changes to how end-of-service benefits are calculated and managed in the UAE.
1. Abolition of Unlimited Contracts
One of the biggest changes is the shift to Fixed-Term (Limited) Contracts for all private sector employees. This simplifies the gratuity calculation as the complex rules for resigning from an unlimited contract no longer apply.
2. Full Gratuity on Resignation
Previously, employees resigning before 5 years of service often faced a reduction in their gratuity. Under the New Gratuity Rules, employees are entitled to full gratuity (based on the 21/30 day formula) provided they have completed at least one year of service and serve their notice period.
Summary of New Calculation
- Less than 1 year: No gratuity.
- 1 - 5 years: 21 days' basic salary per year.
- Over 5 years: 30 days' basic salary per year.