UAE End of Service Gratuity Calculator (EOSB) 2026

How UAE Gratuity (EOSB) Works

End-of-service gratuity (EOSB) in the UAE is a lump-sum payment that employers are legally required to pay employees upon the termination of the employment relationship. The legal basis is Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, which came into effect on 2 February 2022, replacing the earlier Federal Law No. 8 of 1980.

The gratuity serves as a form of retirement benefit in a country that does not have a universal pension system for expatriate workers. For the approximately 9 million expatriate workers in the UAE, gratuity often represents a significant portion of their total compensation and savings upon leaving the country.

The UAE Gratuity Formula

The gratuity calculation under the current UAE law is as follows:

• First five years of service: 21 calendar days of basic salary for each year of service.
• After five years: 30 calendar days of basic salary for each additional year of service.
• Cap: The total gratuity amount shall not exceed the equivalent of two years' basic salary.
• Pro-rata: Fractions of a year are calculated proportionally.

The daily wage for gratuity purposes is calculated by dividing the monthly basic salary by 30 (calendar days).

Example Calculations

The following examples illustrate how the UAE gratuity formula works in practice:

Note: These calculations are simplified for illustration. The actual daily rate is basic monthly salary divided by 30. Use the calculator above for precise figures.

What Counts as Basic Salary

Only the basic salary component of the employment package is used for gratuity calculation. The following are typically excluded:

• Housing allowance
• Transport allowance
• Phone or communication allowance
• Education allowance
• Annual bonuses (unless contractually guaranteed as part of basic remuneration)
• Overtime payments
• Commission and variable pay

This distinction is critical when evaluating job offers. An employer offering a higher total package but lower basic salary will result in lower gratuity. For example, an employee with AED 20,000 total package but AED 8,000 basic salary will accumulate gratuity at a significantly lower rate than one with AED 12,000 basic salary on a similar total package.

The Two-Year Cap

Article 51 of Federal Decree-Law No. 33/2021 states that the aggregate gratuity shall not exceed the wage of two years. This means that regardless of how many years an employee works, the maximum gratuity payout is capped at 24 months of basic salary. For long-tenured employees with high basic salaries, this cap can become a limiting factor in total gratuity entitlement.

DIFC and ADGM Differences

If you work in the Dubai International Financial Centre (DIFC) or the Abu Dhabi Global Market (ADGM), different rules apply:

DIFC (Employment Law No. 2 of 2019): The gratuity formula is similar to mainland UAE -- 21 days per year for the first five years and 30 days thereafter. However, DIFC employers may establish a qualifying scheme (similar to a defined-contribution pension) as an alternative to traditional gratuity. Employees must opt into the scheme, and if they do, the employer contributes 5.83% of basic salary for the first five years and 8.33% thereafter into the fund.

ADGM (Employment Regulations 2019): ADGM introduced the DEWS (DIFC Employee Workplace Savings) scheme -- a defined-contribution workplace savings plan. Employers contribute a percentage of basic salary monthly, and the accumulated funds belong to the employee. This replaces the traditional gratuity accrual model.

Gross Misconduct Exceptions

Under Article 44 of Federal Decree-Law No. 33/2021, an employer may terminate an employee without notice and without paying gratuity if the employee commits certain acts of gross misconduct, including:

• Assuming a false identity or submitting forged documents
• Committing a mistake resulting in substantial material loss to the employer, provided the employer notifies the Ministry within 7 working days
• Violating safety instructions (if written and posted prominently) in a way that causes harm
• Being absent without valid reason for more than 20 non-consecutive days in one year, or more than 7 consecutive days
• Disclosing confidential information causing demonstrable harm to the employer
• Being convicted of a crime involving honour, honesty, or public morals
• Being intoxicated at work or under the influence of narcotic substances
• Assaulting the employer, manager, or colleagues during work

In all other circumstances -- including resignation, mutual termination, contract expiry, or employer-initiated termination -- the employee is entitled to full gratuity.

Resignation vs. Termination

Under the previous UAE Labour Law (Federal Law No. 8 of 1980), employees who resigned had reduced gratuity entitlements. This distinction was removed by Federal Decree-Law No. 33/2021. Under the current law, employees receive the same gratuity regardless of whether they resign or are terminated, provided they have completed at least one year of service and are not dismissed for gross misconduct.

This is a significant change that benefits employees who choose to leave voluntarily and is an important consideration when comparing UAE gratuity with Saudi Arabia's system, which still applies resignation reductions.

Frequently Asked Questions

Sources

• UAE Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations
• UAE Ministry of Human Resources and Emiratisation (MOHRE) -mohre.gov.ae
• DIFC Employment Law No. 2 of 2019
• ADGM Employment Regulations 2019