Retiring after 28 years: when the two-year cap applies

The cap on UAE gratuity is real but rare. It only starts to bite at around twenty-five and a half years with one employer. This case is past that point, and it is also a useful place to look at exactly what the ceiling is measured against.

The facts

Workshop foreman, Abu Dhabi mainland, private company under the federal law
Started 1 June 1998; employment ended by agreement on 1 June 2026
Basic wage 9,000 AED at the end; total package 14,500 with housing and transport
Same legal employer throughout, no unpaid leave on record

Step 1 — the service period

1 June 1998 to 1 June 2026 is 28 years exactly. The years before 2 February 2022, when the current decree-law came into force, count in full: the change in the law altered how gratuity is worked out, not when service began. Article 8(4) also confirms that renewals and extensions of a contract are added to the original term when counting continuous service, so a long run of renewed contracts is one period, not several.

Step 2 — the uncapped entitlement

Daily basic: 9,000 ÷ 30 = 300 AED.

First five years: 5 × 21 = 105 days
Remaining 23 years: 23 × 30 = 690 days
Total 795 days × 300 = 238,500 AED

Step 3 — apply the ceiling

Article 51(6) provides that the end-of-service benefit "in its entirety does not exceed two years' wage". Applied to the basic wage, as it is in practice and in the calculator on this site:

24 × 9,000 = 216,000 AED
238,500 exceeds that, so the payable gratuity is 216,000 AED
The cap removes 22,500 AED — exactly the last 75 days of entitlement

Where the cap begins

Two years of basic wage is 24 months × 30 days = 720 days. The first five years earn 105 days, leaving 615 to be earned at 30 a year: 615 ÷ 30 = 20.5 years. So the cap is reached at 25 years and 6 months of service, whatever the salary. Every day after that adds nothing to the gratuity. In this case the last two and a half years were, in gratuity terms, unpaid.

Why 12 years is nowhere near it

People with long but not exceptional service sometimes worry they are close. They are not. Twelve years on the same 9,000 basic is 105 + (7 × 30) = 315 days, or 94,500 AED — well under half the ceiling. Even twenty years is 555 days. The cap is a provision for people who have spent most of a working life with one employer.

Days earned against the 720-day ceiling, at any salary.
Service	Days earned	Share of ceiling
5 years	105	15%
12 years	315	44%
20 years	555	77%
25 years 6 months	720	100%
28 years	795 (capped at 720)	100%

The wording point worth knowing

Article 51(2) calculates the benefit on the basic wage. Article 51(6) caps it at "two years' wage". The decree-law defines "wage" separately from "basic wage": wage is the basic wage plus cash allowances and benefits in kind under the contract. The UAE Government portal repeats the cap in the same words — the total "shall not exceed the wage of 2 years".

The common practice, and the conservative approach this site takes, is to apply the ceiling to the same basic wage the gratuity is calculated on: 24 months of basic. On the alternative reading — 24 months of the full 14,500 package, or 348,000 AED — the ceiling would not bite here at all, and the full 238,500 would be payable.

We do not know of a published ruling that settles the point, and we are not going to pretend to. What it means in practice is simple: if your entitlement is above two years of basic wage, the difference between the two readings is real money — 22,500 AED in this case — and is worth putting to a UAE-qualified lawyer before you accept a capped figure.

The rest of the settlement

Item	Amount	Basis
End-of-service gratuity	216,000	Article 51, capped under Article 51(6) on the basic-wage reading
Final salary	14,500	Full package for May
Untaken annual leave	by days	At 300 AED per day, Article 29(9)
Repatriation expenses	check	Article 13(12), unless he joins another employer

Payable within 14 days of 1 June 2026 (Article 53).

Long-service traps

A restructured basic. Over 28 years a package is often reorganised, and a basic that was once 60% of pay can drift to 40%. Because the final basic is applied to every year, a late restructuring cuts the whole gratuity. See salary changed during service.
Gaps in the record. Long careers often include a transfer between group companies or a change of legal entity. Article 48 keeps contracts alive through a change of the establishment's form or legal status, but a move to a different entity is a different question. Get continuity confirmed in writing.
Old settlements. Some long-serving employees were paid out part of their gratuity years ago when a contract was renewed. If that happened, the earlier period may already have been settled, and the employer will want to set it against the total. Find the paperwork.

Questions

Does the two-year cap apply to UAE nationals?

The Article 51 gratuity does not apply to UAE nationals at all. Article 51(1) sends them to the pensions and social security legislation instead. See UAE and GCC nationals.

Is there a cap in ADGM or DIFC?

They have their own rules. ADGM's 2024 Employment Regulations removed the two-year cap that its 2019 Regulations contained. DIFC replaced exit gratuity with monthly DEWS contributions in 2020. See ADGM and DIFC DEWS.

Figures are for the case described. Published 2026-10-18 and reviewed against Federal Decree-Law No. 33 of 2021. General guidance, not legal advice — see the disclaimer.