Latest Updates on UAE Gratuity Laws in Ras Al Khaimah

Ras Al Khaimah, like all Emirates, follows UAE federal labour law for gratuity. The Federal Decree Law No. 33 of 2021, which took effect on 2 February 2022, overhauled the old 1980 UAE Labour Law. Under the previous law, resigning employees (especially on unlimited contracts) received only a fraction of their gratuity (e.g. one-third or two-thirds) if they left before five years of service. Now, an employee who completes at least one year of service is entitled to their full gratuity, regardless of whether they quit voluntarily or are terminated, and irrespective of the reason for leaving. 

Another major update is the unification of rules between the public and private sectors. Historically, government (public sector) employees often enjoyed more generous end-of-service packages than private-sector workers. However, recent regulations have aligned the two systems. Full-time private sector employees and federal government employees now accrue gratuity at the same rate under unified labour rules. 

This means the basic formula for calculating gratuity (explained below) applies broadly to both sectors after the reforms. It’s a win-win situation aimed at fairness: public-sector workers don’t get less than their private counterparts, and private employees benefit from the improved, standardized terms. Keep in mind that these changes came alongside a shift to all fixed-term contracts in the UAE, replacing unlimited contracts and simplifying how gratuity is computed.

How Gratuity is Calculated in Ras Al Khaimah (UAE)

To be eligible, you likely need at least one year of continuous service at Hawkins. The formula is:

• 1–5 years: 21 days of basic salary per year.
• Over 5 years: 30 days of basic salary per year for additional years.
• Cap: Total gratuity cannot exceed two years’ basic salary.

For example, with a AED 10,000 monthly basic salary and 6 years of service:

• Gratuity = (5 × 21 × 10,000/30) + (1 × 30 × 10,000/30) ≈ AED 45,000

Payments are typically due within 14 days of employment ending.

Online Gratuity Calculator Ras Al Khaimah

Our free tool, like the Gratuity Calculator for Ras Al Khaimah shown above, can quickly estimate your gratuity. Just enter basic details like your salary and years of service to get an instant result, which you can verify with HR for accuracy.

Why Gratuity Matters in Ras Al Khaimah?

Gratuity is a financial safety net for employees transitioning between retiring or jobs. For employers, accurate calculations ensure compliance and foster trust. In Ras pAl Khaimah’s competitive job market, understanding gratuity aligns with legal and ethical standards, enhancing workplace fairness.

Sector-Specific Gratuity Rules

Gratuity rules vary across sectors in Ras Al Khaimah, reflecting different employment conditions and legal frameworks.

Private Sector

• Eligibility: All employees (UAE nationals and expatriates) are eligible after one year of continuous service.
• Calculation: Follows the standard UAE Labour Law formula (21 days for first 5 years, 30 days thereafter).
• Recent Update: The MEWSS, introduced in 2025, allows RAKEZ employers to fund gratuity through a voluntary savings scheme managed by PraxisIFM Trust Limited and Equevu Ltd. Employers deposit funds into a segregated trust account, but remain liable for direct gratuity payments to employees upon termination.
• Impact: MEWSS helps employers manage gratuity liabilities but does not alter employee entitlements.

Public Sector

• UAE Nationals: Covered by the General Pension and Social Security Authority (GPSSA) under Federal Law No. 7 of 1999. They receive pensions and retirement benefits instead of gratuity (UAE Government Portal).
• Expatriates: Likely entitled to gratuity under the same rules as private sector employees (21/30-day formula), especially for federal government employees. For local government employees in Ras Al Khaimah, specific details should be confirmed with the Department of Human Resources, as local HR policies may apply (RAK HR Department).
• Recent Update: The 2021 reforms unified gratuity rules for federal government and private sector employees, but local government variations may exist (Khaleej Times).

Domestic Workers

• Eligibility: Entitled to gratuity after one year of continuous service, as per Federal Law No. 10 of 2017.
• Calculation: 14 days’ wage per year of service, based on the basic salary. For example:
  • Basic Salary: AED 1,500/month
  • Service: 3 years
  • Gratuity: 3 × 14 × (1,500 ÷ 30) = AED 2,100
• Recent Update: Federal Law No. 9 of 2022 replaced the 2017 law and does not explicitly detail gratuity calculations. MOHRE advised in 2023 that no gratuity is currently payable, but the previous 14-day rule may still apply unless new regulations are issued. Employers are encouraged to follow the 14-day rule as a goodwill gesture until clarity is provided.
• Impact: Uncertainty exists, and domestic workers should check with MOHRE for updates.

Free Zone Employees

• Eligibility: Employees in RAKEZ and other free zones are generally subject to federal gratuity laws unless specific free zone regulations apply.
• Calculation: Follows the standard 21/30-day formula.
• Recent Update: MEWSS, endorsed by RAKEZ in 2025, allows employers to fund gratuity through a voluntary savings scheme, similar to the private sector (Pensions Monitor).
• Impact: Provides financial planning flexibility without changing gratuity entitlements.

Gratuity Insights for Different Audiences in Ras Al Khaimah

Gratuity rules can affect different people in unique ways. Here are tailored insights for various groups, expatriate workers (blue-collar and white-collar), HR professionals, business owners, and government employees, so that everyone is on the same page about end-of-service gratuity.

Expats in RAK (Blue-Collar and White-Collar Workers)

If you’re an expatriate employee in Ras Al Khaimah, know your rights and plan ahead. The gratuity law applies to you regardless of job title or pay grade. Whether you’re a blue-collar construction worker or a white-collar professional, your end-of-service benefits are protected under UAE law. After one full year with your employer, you earn a gratuity payout when you leave, and it grows with every additional year of service. 

One big change post-2022 is that even if you resign to take a better opportunity, you still get 100% of the gratuity you accumulated (unlike the old days when quitting early could cost you a chunk of it). This empowers expat employees to switch jobs when needed without losing their hard-earned benefit.

For blue-collar workers, gratuity can be a significant financial cushion, often equivalent to several months’ pay, so it’s vital to ensure your employer pays it out promptly. Keep records of your start date, basic salary, and any contract changes, so you can roughly estimate your gratuity as you go.

For white-collar professionals, be mindful of how your salary package is structured. Many companies split your compensation into basic salary plus allowances (for housing, transport, etc.). A higher basic salary means a higher gratuity, since allowances are excluded. 

HR Professionals

Human Resources professionals in Ras Al Khaimah need to be fully versed in the updated gratuity rules to ensure compliance and to advise both management and staff correctly. As an HR manager, you should leave no stone unturned in updating your company’s policies in line with Federal Decree Law 33 of 2021 and its executive regulations. 

This means adjusting any internal guidelines that previously prorated gratuity for resignations or treated limited vs. unlimited contracts differently; the new law has overhauled those distinctions. All gratuity calculations should now be straightforward and uniform, so make sure your payroll systems are updated to use the 21/30 days per year formula correctly for each employee’s tenure. 

Business Owners and Employers

Business owners in Ras Al Khaimah must legally provide gratuity, which is a mandatory entitlement. It’s a deferred employment cost, so plan for it in your long-term finances. Under new laws, even if an employee resigns mid-contract, full gratuity must still be paid.

Maintain a provision in your accounts or consider the government’s optional Savings Scheme to avoid sudden financial pressure. The law requires you to calculate gratuity based on the last basic salary and service years and pay it within 14 days of termination.

You may deduct approved advances or loans, but always give a full final settlement. For sectors with high staff turnover like construction or hospitality, stagger contract ends or offer leave encashment to manage liabilities.

Paying gratuity on time builds trust and enhances your company’s reputation. It also protects you from legal issues and helps attract better talent.

Government Employees

If you’re a UAE national in the government sector, you likely contribute to a pension fund (GPSSA) instead of receiving gratuity. Your benefits come through this fund upon retirement, based on service years and salary.

For expatriate government employees, gratuity is usually paid based on federal rules, typically 21 or 30 days per year of service. Some local departments offer better terms, but never less than the law allows.

Always check with your HR department to confirm the formula and any eligibility rules. Government end-of-service benefits are tax-free, and unused leave or travel allowances may also be included in the final payout.

Sector-Specific Gratuity Implications in Ras Al Khaimah

Hospitality

Hotels, restaurants, and tourism businesses in Ras Al Khaimah have a mix of skilled and semi-skilled staff, often with high turnover. In hospitality, many staff receive service charges, tips, or commissions (for example, a share of the hotel’s service charge pool or sales commissions in travel packages). It’s important to understand that gratuity is calculated only on your basic salary, not on those extra earnings.

Construction

The construction sector in RAK employs many blue-collar workers and often operates on project-based employment. Companies should budget for gratuity for large workforces, as even laborers accumulate significant benefits over years. 

From the worker’s side, long projects can mean long service, it’s not uncommon for construction staff to serve 5+ years on multi-year projects, thus earning the higher 30-days-per-year gratuity for the later years. If you’re a construction worker, keep track of your continuous service even if projects or sites change (as long as your employer is the same). 

Retail

Retail businesses (malls, shops, distribution companies) often employ staff on sales commissions and involve shifts and part-time work. Under the new law, even part-time and flexible hour workers are entitled to end-of-service benefits, calculated on a proportional basis according to their working hours vs. a full-time schedule. This means if you’re a part-time retail worker in RAK, you still accumulate gratuity, but a percentage of a full-time equivalent. 

Domestic Work

Domestic workers, such as housemaids, nannies, drivers, and other household staff, have a separate law governing their employment in the UAE. In Ras Al Khaimah, domestic workers are not covered by the general labour law gratuity formula; instead, they fall under the Federal Domestic Workers Law. Notably, a 2017 law had introduced an entitlement of 14 days’ basic wage per year of service as gratuity for domestic workers. 

Conclusion

Calculating gratuity in Ras Al Khaimah doesn’t require a fancy tool, it requires understanding the law and applying a simple formula. The UAE’s updated labour laws have made the process more transparent and equitable, ensuring that employees get what they deserve for their years of service, and that employers know exactly what to prepare for. 

In a nutshell, if you work in RAK (private sector or even federal government), after one year of service you’re entitled to 21 days of basic pay for each year up to five, and 30 days for each year beyond five, as a lump-sum when you leave. Resignations, terminations, private company, public entity, it generally doesn’t matter, the gratuity is yours as long as you’ve earned it.