How can we calculate gratuity in the UAE? It’s a common question among employees planning to change jobs or retire. Gratuity represents your hard-earned reward for loyal service. Understand how can we calculate gratuity so you receive every dirham you deserve and helps you avoid payout errors.
Learning how gratuity works under UAE Labour Law gives you clarity about your benefits and the confidence to verify them yourself.
What Is Gratuity and Why Does It Matter?
Gratuity is a lump-sum payment that employers give once you complete at least one year of continuous service. It acts as a financial safety net when you move to a new job or retire.
Knowing how gratuity is calculated or what the basis of calculating gratuity is helps ensure you don’t lose a single dirham owed to you.
When you understand how to calculate gratuity in the UAE, you can verify your final amount with confidence. To make this easier, you can also use our Free Online Gratuity Calculator for an instant & accurate calculation.
Table of Contents
How Can We Calculate Gratuity in UAE & Who is Eligible
This section clarifies your entitlement and the basis for your final payment, ensuring you understand exactly how your benefit is calculated.
Eligibility for End-of-Service Gratuity
Eligibility under UAE Labour Law is straightforward: you must complete at least one year of continuous service with your employer. Employees dismissed for gross misconduct may lose this benefit, while those who resign after a year can still claim partial or full gratuity.
These rules ensure fairness for both employers and employees:
- Limited Contract: You receive your full gratuity entitlement when the contract ends, provided you have served for more than one year.
- Unlimited Contract: Your entitlement may depend on the length of service before you resign (though this distinction is generally obsolete under the New UAE Labour Law, Federal Decree Law No. 33 of 2021, which applies primarily to the new unified contract type).
Basic Calculation Principles
When learning How can we Calculate Gratuity in UAE, the crucial point is that it is based only on your Basic Salary—not your total pay package (allowances like housing or transport are excluded).
The calculation determines your daily rate (Basic Salary \div 30) and then multiplies it by the eligible days based on your years of service:
- 1 to 5 Years of Service: You are entitled to 21 days of basic pay per year of service.
- Service Beyond 5 Years: You are entitled to 30 days of basic pay per year of service (for the years following the first five).
Understanding how gratuity is calculated based on working years helps every professional claim what they’ve earned with confidence.
Gratuity Formula in the UAE Explained
The gratuity calculation formula is based solely on your basic salary – not your total pay package.
According to UAE Labour Law:
- For the first five years of service, you receive 21 days of basic pay per year.
- For service beyond five years, it increases to 30 days per year.
Below, you will see how can we calculate gratuity in simple steps.
| Years of Service | Gratuity Days per Year | Example (AED 10,000 Basic Salary) |
| Up to 5 years | 21 days | AED 35,000 |
| Above 5 years | 30 days | AED 75,000 |
Example:
If you’ve worked for six years, your gratuity equals (21 × 5 + 30 × 1) ÷ 30 × 10,000 = AED 65,000.
When you know how to calculate UAE gratuity pay, you no longer depend entirely on HR.
How to Use a Gratuity Calculator
Using an official UAE gratuity calculator makes the process quick and reliable.
Simply enter your basic salary, start date, and last working date and the tool will do the rest.
Why Online Calculators Help
- Reduce human error
- Provide instant, accurate results
- Follow the latest UAE Labour Law updates
These tools are ideal for employees who want transparency and precision.
Factors That Affect Gratuity Calculation
Several factors influence your gratuity payment in the UAE:
- Number of years served
- Type of employment contract
- Termination reason
- Any unpaid leave during service
💡 Important: Gratuity is calculated on basic pay only — allowances like housing or travel are excluded. Knowing this prevents confusion when the final amount arrives in your account.
Tax and Legal Aspects of Gratuity
The UAE offers a major advantage – no income tax on gratuity payments. That means your entire amount is paid directly to you.
However, employers must comply with MOHRE rules and release gratuity within 14 days of your final working day.
If there’s a delay or underpayment, you can file a claim through the MOHRE portal.
Advantages of Using an Online Gratuity Calculator
Online tools make gratuity calculation easier than ever. They’re fast, accurate, and private – and many now include the UAE Gratuity Calculator 2025, updated with the latest rules.
Key Benefits
- Instant results
- Updated formulas
- Accessible anywhere
Once you know how to calculate gratuity pay in UAE, you gain full control of your career finances.
How to Claim Your Gratuity Payment
The process is simple:
- Submit your resignation or end-of-contract letter.
- Request your final settlement.
- Verify your years of service and basic pay.
Employers are legally required to pay within 14 days. If they fail to do so, contact MOHRE for assistance.
Keep copies of your labour contract and salary slips – these are essential for verifying your gratuity amount.
Related Tools and Resources
You can explore several reliable sources for gratuity-related information:
- UAE Government Portal — official laws and details
- Khaleej Times and Gulf News — provide updated gratuity calculators
- Financial apps — integrate gratuity, salary, and leave calculators for complete insights
These resources make learning how can we calculate gratuity amount in UAE easy and trustworthy.
Final Advice to Secure Your Gratuity
Now that you understand how can we calculate gratuity in the UAE, you have the power to take control of your own financial rights. Whether you’re resigning, retiring, or completing your contract, knowing the right formula and laws ensures you never lose what you’ve rightfully earned.
Use a trusted UAE gratuity calculator to cross-check your payout and make sure every figure matches your service record. Don’t leave your hard-earned money to guesswork — verify it, claim it, and secure your future.
FAQs
1. How to calculate gratuity formula?
ANS: Gratuity is calculated as (21 days of basic salary × years of service) ÷ 30 for up to five years, and 30 days per year after that.
2. How much gratuity (%) is deducted from the salary?
ANS: Gratuity isn’t deducted monthly it’s a one-time payment made by the employer after your service ends.
3. How do I compute my gratuity?
ANS: Multiply your last basic salary by the number of eligible days (21 or 30) per year and divide by 30, then multiply by total years of service.
4. Is leave salary and gratuity the same?
ANS: No, gratuity is an end-of-service benefit, while leave salary is payment for unused annual leave.
5. What is the standard gratuity amount?
ANS: It depends on your basic salary and total years of service, as per UAE Labour Law guidelines.
6. What is the minimum salary for gratuity?
ANS: There’s no fixed minimum salary, but gratuity is calculated only on your basic pay, not allowances.
7. How to Instantly Verify Your UAE Gratuity Without Complex Math?
ANS: Forget confusing formulas and manual errors. The most efficient and reliable way for you to confirm your exact entitlement is by using a specialized digital tool that instantly processes the latest UAE Labour Law data.
Ready for your number ? Use the FREE Gratuity Calculator UAE 2025 now and get your accurate final settlement figure instantly.