UAE Labour Law · Article 51

End-of-Service Gratuity Calculator for the UAE

Calculate end-of-service gratuity under Federal Decree-Law No. 33 of 2021. Worked examples, accrual rules, and the post-2022 unified treatment for limited and unlimited contracts.

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The Formula

Years 1–5: 21 days × (Last basic salary / 30) × completed years Years 6+: 30 days × (Last basic salary / 30) × completed years Total cap: 24 months of total gross salary (legal maximum) Calculation basis: BASIC salary only (excludes housing, transport, allowances)

Under Federal Decree-Law No. 33 of 2021 (effective February 2022), the calculation is identical for limited and unlimited contracts — the pre-2022 1/3 / 2/3 / full discount on unlimited resignations was abolished.

Worked Example

Example: Employee separates after 7 years 4 months, last basic salary AED 20,000

Last basic salaryAED 20,000
Daily basic (basic / 30)AED 666.67
Years 1–5 (5 × 21 days × AED 666.67)AED 70,000
Year 6 (30 days × AED 666.67)AED 20,000
Year 7 (30 days × AED 666.67)AED 20,000
Year 8 partial (4/12 × 30 days × AED 666.67)AED 6,667
Total EOS Gratuity: AED 116,667 (well within the 24-month cap of AED 480,000)

Who's eligible for end-of-service gratuity?

Under Article 51, all UAE private-sector employees with at least one year of continuous service qualify for EOS — whether they resign, retire, or are terminated under Article 42 (with notice). Employees dismissed under Article 44 (gross misconduct) forfeit their EOS. UAE National employees are NOT eligible — they accrue GPSSA pension benefits instead, with employer contributions of 12.5% of GPSSA-eligible wages.

Basic salary, not total package

The single most-disputed part of EOS calculation is the basis. Article 51 specifies basic salary only — housing, transportation, education, and other allowances are excluded. This is why the offer letter's basic vs total breakdown matters so much. Many UAE employers structure compensation with 50–60% as basic and the rest in allowances; some employees argue the calculation should use total salary, but Article 51 is unambiguous.

Limited vs unlimited contracts (post-2022 reform)

Pre-2022, unlimited-contract employees who resigned got reduced gratuity: 1/3 of the calculated amount for years 1–3 of service, 2/3 for years 3–5, and full amount only after 5 years. The 2021 law abolished this — both limited and unlimited contracts now get the same calculation. This was a major employer-employee fairness improvement.

DIFC and ADGM employees: qualifying schemes

Federal Article 51 does not apply to employees in DIFC or ADGM. Instead, those zones use 'qualifying schemes' — defined-contribution workplace savings plans where the employer contributes monthly to a registered fund. DIFC's default is DEWS (DIFC Employee Workplace Savings) at 5.83% of basic for years 1–5 and 8.33% thereafter. ADGM uses Mercer GIM or another FSRA-approved scheme. Employees can withdraw the balance on separation or transfer to a similar scheme.

Final settlement timing

Article 51 requires the EOS payment to be made as part of the final settlement within 14 days of the last working day. Late payment triggers MoHRE penalties and damages claims. Many UAE employers process EOS together with the last salary, accrued unused leave, and (where applicable) repatriation airfare into a single final-settlement transfer.

How Peoplifi handles EOS gratuity

Peoplifi accrues EOS each pay period on basic salary so the balance is visible in real time on the employee mobile app — no surprises at separation. The final-settlement workflow auto-calculates the total under Article 51, applies the 24-month cap, separates basic from allowances, handles partial-year pro-rata, and produces an audit-ready PDF for payroll sign-off and bank transfer.

Frequently Asked Questions

Is gratuity calculated on basic salary or total salary?

Basic salary only. Allowances (housing, transportation, education) do NOT count toward gratuity per Article 51. This is why the basic-vs-total breakdown on the offer letter matters so much — and why we recommend keeping the basic salary at a level that reflects the actual contribution to gratuity accrual.

What's the difference between limited and unlimited contracts post-2022?

For EOS calculation: none. Under Article 51, both contract types get the same gratuity — 21 days basic for years 1–5, 30 days for years 6+, capped at 24 months. The pre-2022 reduced-gratuity penalty for unlimited resignations was abolished.

Do UAE Nationals get EOS gratuity?

No. UAE Nationals contribute to GPSSA (General Pension and Social Security Authority) throughout employment instead. Employer contributes 12.5% of GPSSA-eligible wages, employee 5%. The pension accrual replaces the lump-sum EOS gratuity expat employees receive.

What if I'm terminated under Article 44?

Article 44 dismissals (gross misconduct — theft, false credentials, repeated unauthorized absence, etc.) result in EOS forfeiture. The employer must document the grounds and the investigation; MoHRE reverses Article 44 dismissals where the evidence is thin, ordering the employer to pay EOS as if it were a normal Article 42 termination.

Does the 24-month cap apply to total salary or basic?

Total gross salary. The legal maximum is 24 months of TOTAL salary, not 24 months of basic. So if your basic is AED 20,000 and your total is AED 30,000, the cap is AED 720,000 — well above what most employees would accrue under the 21/30-day rule.

Skip the spreadsheets

Peoplifi runs these calculations automatically for every employee, every pay cycle — with FBR, EOBI and bank-sheet exports included.

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