Gratuity Calculator UAE 2025 | (MOHRE Updated)
Accurate End-of-Service Benefits Estimator
UAE Gratuity Calculator 2025
What is Gratuity (مكافأة) in UAE?
Gratuity (مكافأة نهاية الخدمة) in the UAE is a lump-sum payment given to employees when they leave a company after completing a minimum period of service. It is part of the end-of-service benefits provided under UAE labour law to reward employees for their service.
However, many employees are unaware of this important entitlement or may not fully understand the gratuity policies, how it is calculated in the UAE, and the factors that influence the final amount. In this article, we will provide a detailed analysis of UAE Gratuity Calculation.
Gratuity Calculator UAE Online
If you are not familiar with how to calculate UAE gratuity also known as end-of-service benefit, the UAE Gratuity Calculator will help you estimate your end-of-service gratuity payment according to Dubai Labour Law. It calculates the amount you are entitled to receive upon resignation or termination, considering all important factors, including basic salary, contract type (limited or unlimited), and years of service.
Understanding End-of-Service Benefits in UAE
According to Article 51 of the UAE Labour Law, expatriate employees in the private sector are entitled to gratuity at the end of their service. To calculate gratuity using an online End-of-Service calculator, you will need to enter key details such as your basic salary, the duration of your service with your employer, and the type of contract you are on. You will receive the gratuity after your retirement.
Complete the Minimum Service Requirement
To qualify for gratuity, you must have worked for at least one year. Employees who resign or are terminated before completing this period are not eligible for gratuity benefits in either the private or public sector.
Determine Your Basic Salary
Gratuity is calculated based on your basic salary, excluding allowances and bonuses. Enter the exact amount to get an accurate estimate using the Gratuity Calculator UAE.
Identify Your Contract Type
Select whether you were on a limited or unlimited contract. The gratuity calculation method depends on the type of contract you had with your employer.
Specify the Reason for Leaving
How you left your job; whether resignation or termination; directly affects your gratuity calculation. Be sure to enter the correct reason to avoid errors.
Enter Your Service Duration
Input the start and end dates of your employment to get a precise calculation of your end-of-service gratuity.
By following these steps, employees can easily estimate their gratuity benefits as per UAE labour laws and ensure they receive the correct amount upon leaving their job.
Who is Eligible for Gratuity?
An employee is eligible for gratuity if:
- They have completed at least one year of continuous service.
- They resign or are terminated as per UAE labour laws.
- They are not dismissed for misconduct under Article 120 of the UAE Labour Law.
How to Calculate Gratuity in UAE?
- Step-by-Step Calculation Process
- Enter Your Basic Salary
- Input Service Period (Start & End Dates)
- Choose Contract Type: Limited or Unlimited
- Select Reason for Leaving: Resignation or Termination
- Get Your Gratuity Estimate (AED Output)
- Click Calculate Gratuity Button
Gratuity Calculation Formula (UAE Labor Law)
In the United Arab Emirates (UAE), end-of-service benefits are determined based on an employee's last drawn basic salary and the length of continuous service. The formula differs depending on whether the employee is on a Limited vs Unlimited Contract, and if they have completed at least one year of service. To simplify this process, the gratuity in UAE Calculator helps employees estimate their entitlements accurately and quickly.
The general formula is:
$$Gratuity\;=Daily\;Wage\times Gratuity\;Days\;Per\;Year\;\times Years\;of\;Service$$
Where:
- Daily Wage = Basic Salary ÷ 30
- Gratuity Days Per Year depends on the type of contract and length of service.
Limited Contract (Completed Full Contract Term)
If the employee completes their contract, they are entitled to:
- 21 days’ basic salary per year for the first 5 years.
- 30 days’ basic salary per year for each year beyond 5 years.
Formula:
- If service is ≤ 5 years
$$\left(\frac{Basic\;Salary\;}{30}\div21\right)\times Years\;of\;Service$$
- If service is > 5 years
$$\left(\frac{Basic\;Salary\;}{30}\times21\right)\times5+\left(\frac{Basic\;Salary}{30}\right)\times Years\;of\;Service\times5$$
Unlimited Contract
It is important to determine whether an employee has resigned or was terminated when calculating their gratuity. If the employee resigns, the bonus will be calculated using the gratuity calculation formula for an unlimited contract given below.
If the Employer Terminates the Employee:
- If service is less than 1 year → No gratuity.
- If service is between 1-5 years → 21 days’ basic salary per year.
- If service is more than 5 years → 21 days per year for the first 5 years, 30 days per year thereafter.
If the Employee Resigns:
- Less than 1 year → No gratuity.
- 1-3 years → 1/3 (33.3%) of gratuity amount.
- 3-5 years → 2/3 (66.6%) of gratuity amount.
- More than 5 years → Full gratuity.
Example Scenario
- Basic Salary: AED 10,000
- Service Duration: 6 years
- Contract Type: Limited Contract
Step 1: Calculate Daily Wage
$$\left(\frac{10,000}{30}\right)=333.33$$
Step 2: Calculate Gratuity for First 5 Years
$$\left(333.33\times21\right)\times5=34,999.65$$
Step 3: Calculate Gratuity for Additional Year
$$\left(333.33\times30\right)\times1=9,999.90$$
Total Gratuity Amount
$$34,999.65+9,999.90=44,999.55AED$$
Maximum Limit on Gratuity
Gratuity cannot exceed two years’ worth of salary, as per UAE Labour Law.
Gratuity for Domestic Workers
For domestic workers in the UAE, gratuity is calculated as one month's salary for each year of service, in accordance with the UAE Domestic Workers Law. To make this process easier and more accurate, the gratuity calculator UAE for domestic workers can be used to estimate the end-of-service benefits based on their length of service and final salary.
Important Notes:
- Gratuity is calculated based on the last drawn basic salary.
- If an employee resigns before completing 5 years, gratuity may be reduced in certain cases.
- Unpaid leave is not counted in gratuity calculations.
Common Mistakes to Avoid
- Misinterpreting Basic Salary
One of the most frequent mistakes when calculating gratuity is misunderstanding what qualifies as “basic salary.” In the UAE, gratuity is calculated only on the basic salary, not on allowances like transportation, housing or bonuses. Using gross salary leads to incorrect results.
- Incorrect Service Duration
Gratuity is directly linked to the total number of years (and partial years) you've served in a company. Miscalculating your service duration, either overestimating or underestimating, can significantly affect your payout.
- Not Knowing Contract Type
The gratuity calculation differs between limited and unlimited contracts. Many employees are unaware of their contract type, which leads to applying the wrong formula. This can result in incorrect expectations or surprises at the time of departure.
- Misunderstanding Gratuity Rights
Gratuity entitlement depends on several factors like contract type, duration of employment, and the reason for job termination. Not knowing your rights under UAE Labour Law can lead to disappointment and missed entitlements. Educating yourself helps you plan better and claim what you rightfully deserve.
Tips to Maximize Your Gratuity
- Understand UAE Labor Law
To make the most of your gratuity benefits, it's essential to have a clear understanding of the UAE Labour Law. These laws outline the minimum requirements for gratuity eligibility, calculation methods, and employer obligations. Being aware of your legal rights ensures you're never underpaid or misinformed. Stay updated with the latest MOHRE guidelines, especially if there are changes in contract rules, end-of-service benefits, or employment terms.
- Review Your Employment Contract
Your employment contract is a legally binding agreement that contains crucial details about your role, salary, contract type (limited or unlimited), and termination/resignation conditions. Carefully reviewing your contract helps you understand what benefits you're entitled to upon leaving the job. Make sure the terms align with UAE Labour Law to avoid discrepancies that might affect your gratuity.
- Keep Detailed Work Records
Maintaining a record of your employment details can save you time and potential legal disputes. This includes offer letters, salary slips, contract copies, visa details, start and end dates, and any communication related to promotions or contract renewals. Having these documents handy can be extremely useful when calculating gratuity or resolving conflicts.
- Seek Professional Advice if Needed
If you're unsure about your rights or how your gratuity is being calculated, don't hesitate to consult an HR expert, legal advisor, or labor consultant in the UAE. Professional guidance ensures that you receive the correct gratuity and that all aspects of your contract are being respected.
Using tools like the gratuity calculator for UAE can also give you a clear estimate and help you make informed financial decisions. It's a small step that could protect your long-term financial interests.
Final Thoughts
Understanding gratuity calculation rules is essential for both employees and employers in the UAE. Whether you resign or are terminated, your gratuity is calculated based on your basic salary and years of service. Employees should always review their contracts and ensure they receive their rightful gratuity as per UAE labour laws.