VoxxArrive · UAE onboarding topic
End-of-Service Gratuity (EOSB) in the UAE: Article 51 Calculation Guide for Employers
Under Article 51 of Federal Decree-Law No. 33 of 2021, a full-time private-sector employee who completes at least one continuous year is owed end-of-service gratuity of 21 days' basic wage for each of the first five years and 30 days' basic wage for each subsequent year, with the total capped at two years' basic wage. Gratuity is calculated on basic salary only (allowances excluded), pro-rated for part-years, and must be paid within 14 days of the contract ending. Since the 2022 reform abolished unlimited contracts, the old resignation-based reductions no longer apply - a resigning employee with 1+ year's service now receives their full accrued gratuity.
Steps
- Confirm eligibility (1 year minimum) - Gratuity is only owed once the worker completes at least one year of continuous service. Days of unpaid absence are not counted toward the service period (Article 51). Note: free zones such as DIFC and ADGM run their own end-of-service regimes (e.g. DIFC's DEWS scheme) and are not governed by MOHRE's Article 51.
- Use basic wage only, not the gross salary - Base the whole calculation on the employee's last basic wage. Housing, transport, utilities, furniture and other allowances are expressly excluded (u.ae / MOHRE).
- Derive the daily wage - Divide the monthly basic wage by 30 to get the daily rate. This daily rate is the unit multiplied by the 21- or 30-day accrual figures. (Divisor is the market-standard convention; see 'unverified' for the point that the statute does not itself state a 30-day divisor.)
- Apply 21 days per year for the first five years - For each of the first five completed years, the employee accrues 21 days of basic wage. Example mechanics: (basic ÷ 30) × 21 × number of years in the first five-year block.
- Apply 30 days per year beyond five years - For every year served after the fifth, the accrual rises to 30 days of basic wage: (basic ÷ 30) × 30 × years beyond five.
- Pro-rate incomplete years - Once the one-year threshold is met, fractions of a year are paid proportionately to time served (u.ae / MOHRE).
- Apply the two-year cap - The total end-of-service gratuity must never exceed two years' basic wage, however long the employee served (Article 51).
- Settle any lawful deductions and pay within 14 days - Amounts the employee lawfully owes the employer may be deducted from the settlement. The net gratuity, with all other end-of-service dues, must be paid within 14 days of the contract ending.
Timeline
Gratuity must be paid within 14 days of the contract's end date. Entitlement itself only begins to accrue after one full year of continuous service.
Cost & fees
Gratuity is an employer liability, not a government fee. The amount is driven entirely by the employee's last basic wage and length of service (21 days' basic wage per year for years 1-5, 30 days per year thereafter), capped at two years' basic wage. There is no fixed figure - it scales with each individual's salary and tenure.
Your task slice
1 of the 57 onboarding tasks apply here.
Confirm gratuity/end-of-service accrual tracking has started in payroll
Some figures on this page vary by jurisdiction, zone or nationality, or could not be independently confirmed from a public source at time of writing - confirm the current figure with the regulator before relying on it.
Sources
Frequently asked
Is gratuity calculated on my total salary or just basic pay?
Basic wage only. Allowances such as housing, transport, utilities and furniture are excluded from the calculation under Article 51 (u.ae / MOHRE).
Does resigning reduce my gratuity under the new law?
No. The 2022 reform (Federal Decree-Law No. 33 of 2021) abolished unlimited-term contracts and the old sliding-scale reductions that cut a resigning employee's gratuity. An employee who resigns after completing at least one year now receives their full accrued gratuity on the 21/30-day basis.
What is the maximum gratuity an employee can receive?
The total gratuity is capped at two years' basic wage, no matter how many years the employee has served (Article 51).
Do fixed-term contracts change the gratuity formula?
No. Since February 2022 all private-sector contracts are fixed-term, and the same 21/30-day formula applies. There is no longer a separate calculation for 'limited' versus 'unlimited' contracts.
How soon must gratuity be paid after employment ends?
Within 14 days of the contract's end date, together with the employee's other final dues (u.ae / MOHRE).