What changed on 2 February 2022
Federal Decree-Law No. 33 of 2021 replaced Federal Law No. 8 of 1980 in its entirety. Forty-two years of accumulated practice changed at once, and a great deal of what is still published online describes the old regime.
The changes that affect gratuity
| Point | Before | Now |
|---|---|---|
| Contract types | Limited and unlimited | All fixed-term. The unlimited contract no longer exists |
| Resignation | Lost one third or two thirds of gratuity on an unlimited contract | No reduction. Same entitlement as termination |
| Summary dismissal | Article 120 could forfeit gratuity | Not automatically forfeited. No equivalent forfeiture clause |
| Part-time work | Barely addressed | Recognised, with gratuity pro-rated by contracted hours |
| Payment deadline | Loosely defined | 14 days from the end of the relationship |
| Alternative schemes | None | A voluntary savings scheme employers may opt into instead of the lump sum |
Why so much bad information is still circulating
The old rules were in force from 1980 to 2022. Every article, forum answer, HR handbook and online calculator written in those four decades describes them, and most of it is still indexed. A page explaining the one-third rule looks authoritative because it was correct for a very long time.
The practical test is the limited-versus-unlimited question. If a source asks which type of contract you have, it was written for the old law. That distinction does not exist in the current one.
Your whole service counts, including the years under the old law. The change altered how the gratuity is calculated, not when your service began. A settlement worked out today uses the current rules across your entire period of employment.
The voluntary savings scheme
Cabinet Resolution No. 96 of 2023 allows employers to opt into a federal savings scheme in place of the traditional lump sum. Instead of accruing a liability paid on exit, the employer makes monthly contributions into a fund held for the employee.
It is voluntary for the employer, and most have not adopted it. If yours has, your accrued rights up to the switch are preserved and the calculator on this site covers only the traditional entitlement. Ask your employer which arrangement applies to you.
DIFC and ADGM are separate
Neither financial free zone is governed by the federal law. DIFC replaced gratuity with DEWS, a funded defined-contribution scheme where the employer pays monthly into a plan rather than calculating a lump sum on exit. ADGM has its own regulations. If your contract is under either, nothing on this site applies.
Related
- Resignation and terminationThe biggest single change, in detail
- How gratuity is calculatedThe current formula, step by step
Reviewed 2026-09-19 against Federal Decree-Law No. 33 of 2021 and Cabinet Resolutions No. 1 of 2022 and No. 96 of 2023. General guidance, not legal advice — see the disclaimer.