How gratuity is calculated

Article 51 of Federal Decree-Law No. 33 of 2021, step by step, with the arithmetic shown at each stage so you can check any figure you are given.

The rule

Entitlement for eligible foreign full-time private-sector workers under the federal law, after one year of continuous service. UAE and GCC nationals are covered by pension and social-security legislation instead.
Service	Per year
Each of the first five years	21 days' basic wage
Each year after the fifth	30 days' basic wage
Under one year	No entitlement
Maximum total	Two years' wage

The four steps

1. Establish the daily basic wage

Monthly basic divided by 30. This is the convention used throughout UAE practice, and it is what makes 21 days read as 0.7 of a month.

daily basic = monthly basic ÷ 30

2. Establish the service period

From the first working day to the last, less any days of unpaid absence. Count the whole years by date — 1 March 2016 to 1 March 2026 is ten years, not ten years and two days — then take what is left over as a fraction of the year it falls in. Do not round to whole years: part years are paid pro rata.

How we turn dates into a number of years

Article 51 requires fractions of a year to be paid in proportion, but it does not prescribe the arithmetic for converting a span of dates. The obvious shortcut — divide total days by 365 — counts a leap day as an extra sliver of a year, so three calendar years came out as 3.0027 and a decade as 10.0055. We counted that way until September 2026 and no longer do.

Whole years are now counted by date, and only the remainder is pro-rated, over the length of the year it actually falls in. Three calendar years is 3.00. A 29 February start counts its anniversary on 28 February in non-leap years. Figures came down by roughly 0.09% and now never exceed what an employer computing by exact anniversaries would reach — which matters, because a figure of ours that sits above a correct calculation is one you would lose an argument over.

One limit worth knowing. If you enter a length rather than dates, a month has to be treated as a twelfth of a year, because months are not all the same size: 15 January to 15 March is 59 days, 15 June to 15 August is 61. Whole years agree exactly in both modes; a period given in months can sit a little either side of what your real dates produce. Enter the dates where you have them.

3. Count the entitlement in days

days = min(years, 5) × 21 + max(0, years − 5) × 30

4. Multiply, then apply the ceiling

Days × daily basic. If the result exceeds two years' wage, it is capped there. The cap begins to bite at around 25 years and 6 months of service, so most people never reach it.

Three worked examples

Three years, 8,000 AED basic

Daily basic = 8,000 ÷ 30 = 266.67 AED
3 × 21 = 63 days
63 × 266.67 = 16,800 AED — 2.1 months of basic

Seven years six months, 10,000 AED basic

Daily basic = 333.33 AED
First five years: 5 × 21 = 105 days
Remaining 2.5 years: 2.5 × 30 = 75 days
180 × 333.33 = 60,000 AED — six months of basic

Twelve years, 15,000 AED basic, 45 days of unpaid leave

Service = 12 years less 45 unpaid days = 11 years and 320 days = 11.877 years
First five: 105 days. Remaining 6.877 years: 206.3 days
311.3 × 500 = 155,650 AED
Without the unpaid leave it would have been 157,500 — the 45 days cost 1,850 AED

What is not in the formula

Gratuity is one line in a final settlement. These are separate and are not part of Article 51:

Unused annual leave, paid at basic wage
Notice pay where notice was not worked
Outstanding wages, overtime and commission
Repatriation expenses — a statutory obligation on the employer under Article 13(12), not merely a contractual one: repatriation to your place of recruitment or another agreed destination, unless you join another employer or the reason for termination is attributable to you
Article 47 compensation for unlawful termination — a narrow claim, available where the termination followed a serious complaint to MOHRE or a proven lawsuit against the employer, capped at three months' last wage

All of it, gratuity included, is payable within 14 days of the employment ending.

Checking a figure you have been given

Work backwards. Divide the gratuity offered by your daily basic wage to get the number of days, then compare against step 3. If the days are short, the disagreement is about your service period or your basic wage — not about the formula. That tells you which document to ask for.

Reviewed 2026-09-27 against Federal Decree-Law No. 33 of 2021. General guidance, not legal advice — see the disclaimer.