Anyone who works in the UAE, whether employee or employer, sooner or later deals with the "end-of-service gratuity": an amount the employer pays the employee when the contract ends. This article is based on the "End of service benefits for workers in the private sector" page and the "Pension schemes for expatriate workers" page of the official UAE Government portal (`u.ae`), checked on 25 October 2026.
Why the gratuity matters
The UAE Government portal says plainly that there are no pension schemes for expatriate workers in the UAE and that they are entitled to an end-of-service gratuity instead. So for an expatriate employee, this gratuity is the most important amount received after years of work. UAE citizens fall under the UAE pensions and social security law, and citizens of Gulf Cooperation Council countries under their own countries' social security laws; this article is about expatriate employees in the private sector.
The calculation rules
| Subject | What the UAE Government portal says |
|---|---|
| Minimum service | At least one year of continuous service; under one year, no gratuity |
| First five years | 21 days' wage for each year of work |
| After five years | 30 days' wage for each year of work after the first five |
| Wage basis | The last basic wage, without allowances |
| Part of a year | Once the first year of continuous service is complete, a fraction of a year also earns gratuity |
| Cap | The total gratuity does not exceed two years' wages |
| Unpaid absence | Days of unpaid absence are not counted in the service |
| Deduction of debts | The employer may deduct amounts the employee owes from the gratuity |
| Payment deadline | Within 14 days of the end of the contract, with the wages and other dues |
The key point is the "basic wage": many contracts split the total salary into a basic wage and allowances such as housing and transport. The gratuity is calculated on the basic wage only, so check the basic wage figure separately when you sign the contract.
Part-time and temporary work
The UAE Government portal says the gratuity for part-time work is calculated in proportion to the contract hours compared with full-time hours; the basis of this rule is Article 30 of Cabinet Resolution No. 1 of 2022. The same page says the end-of-service gratuity does not apply to temporary work of less than one year.
The alternative savings scheme
The UAE Government portal also describes an optional "savings scheme" that an employer can use instead of the traditional gratuity. In this scheme, the employer sets aside a percentage of the basic wage for the employee every month:
| Employee's service | Employer's monthly contribution from the basic wage |
|---|---|
| Less than five years | 5.83% |
| More than five years | 8.33% |
| Optional extra contribution | Up to 25% of the wage |
These percentages match the traditional rule: 21 days out of 360 days is about 5.83 per cent and 30 days out of 360 days is about 8.33 per cent. Ask the employer and the scheme's operator about the investment and withdrawal details.
The government sector
The same pension schemes page gives a different rule for expatriate employees in the government sector:
| Service in the government sector | Gratuity for each year |
|---|---|
| First five years | One month's basic pay |
| Second five years | One and a half months' basic pay, based on the average basic pay of the last five years |
| After ten years | Two months' basic pay |
Three worked examples
These examples are hypothetical and only apply the official rules above. The law states the gratuity in "days' wage". In these examples, for simplicity, the daily wage is assumed to equal the monthly basic wage divided by 30; ask the Ministry of Human Resources and Emiratisation for the exact conversion in your case.
**Example 1: three years of work.** An employee with a monthly basic wage of AED 6,000 ends the contract after three years of continuous service.
| Line | Calculation | Result |
|---|---|---|
| Gratuity days | 3 × 21 | 63 days |
| Daily wage (assumed) | 6,000 ÷ 30 | AED 200 |
| Gratuity | 63 × 200 | AED 12,600 |
**Example 2: eight years of work.** An employee with a monthly basic wage of AED 10,000 ends the contract after eight years of continuous service.
| Line | Calculation | Result |
|---|---|---|
| First five years | 5 × 21 | 105 days |
| Next three years | 3 × 30 | 90 days |
| Total days | 105 + 90 | 195 days |
| Daily wage (assumed) | 10,000 ÷ 30 | about AED 333.33 |
| Gratuity | 195 × 333.33 | about AED 65,000 |
| Two-year cap | 24 × 10,000 | AED 240,000; the gratuity is below the cap |
**Example 3: ten months of work.** An employee ends the contract after ten months of work. Because a full year of continuous service has not been completed, under the stated rule no end-of-service gratuity is due; the employee's wages and other dues must still be paid within 14 days.
**Savings scheme example.** If the employer of the employee in Example 2 had enrolled them in the savings scheme during their first three years, the employer's monthly contribution would have been 5.83% of AED 10,000, that is AED 583.
Practical points
- In the employment contract, check the basic wage separately; the gratuity is calculated on this figure only.
- Keep a record of your start date and any unpaid absence; the service is calculated from these.
- When the contract ends, keep the 14-day payment deadline in mind.
- If the employer has enrolled you in the savings scheme, ask for a statement of the monthly contributions.
- For employers: set the end-of-service gratuity aside in the financial plan from the start; see the article "UAE corporate tax" for corporate tax.
- In a dispute, seek help through the official channels of the UAE Ministry of Human Resources and Emiratisation.
Royal Golden does not give legal or financial advice. This article is general information, and the decision on any case rests with the employer, the UAE Ministry of Human Resources and Emiratisation and the competent courts.
Sources
- UAE Government portal, End of service benefits for workers in the private sector — https://u.ae/en/information-and-services/jobs/Sector-of-employment/employment-in-the-private-sector/end-of-service-benefits-for-employees-in-the-private-sector (checked on 25 October 2026)
- UAE Government portal, Pension schemes for expatriate workers in private and government sectors — https://u.ae/en/information-and-services/moving-to-the-uae/expatriates-working-in-the-uae/pension-schemes-for-expatriate-workers (checked on 25 October 2026)