Introduction — Why the UAE Gratuity Calculation Formula Matters
Imagine leaving your job and realizing that a small mistake has cost you a significant amount of money. Gratuity isn’t just a benefit; it’s the money you’ve earned after years of hard work. But how do you make sure you’re getting the right amount? The gratuity calculation formula in UAE decides the lump sum you’re entitled to, and understanding it is crucial to avoid losing money. Even a tiny error can have a huge financial impact, so it’s important to get it right.
By understanding how the calculation formula works, you can avoid making mistakes. Whether you’re using an online gratuity calculator or calculating it manually, the right tools and knowledge will help you ensure you get the correct amount. For a simple and accurate way to calculate your gratuity, visit our UAE gratuity calculation formula tool to get started and claim what you deserve.
What Is the Gratuity Calculation Formula in UAE?
Official Formula for Calculating Gratuity in UAE
The law says you get:
- 21 days of basic salary for each year of service for the first 5 years
- 30 days of basic salary for each year after 5 years
Your daily wage = basic salary ÷ 30
Total gratuity = daily wage × total gratuity days
This is the core formula for calculating gratuity in UAE and applies to most private-sector employees.
Basic Salary vs Total Salary — What Really Counts?
Many people think allowances are included. But legally, gratuity is based on basic salary only, unless your contract clearly says otherwise. So housing, transport, fuel, or bonus don’t count. Always check your contract and pay slip breakdown before calculating.
How to Calculate Gratuity in UAE
Step-by-Step Manual Gratuity Calculation Method
- Find your daily wage: basic salary ÷ 30
- Multiply daily wage × 21 days (for each year up to 5 years)
- Multiply daily wage × 30 days (for each year after 5 years)
- Add months proportionally (e.g., 6 months = 0.5 year)
- Check if any unpaid leave must be removed
- Total all days × daily wage → final gratuity
This is the simplest, most reliable way to do your gratuity calculation formula by hand.
Gratuity Formula for Unlimited Contract (Updated Rules)
For unlimited contracts, the calculation method stays the same, but resignation and termination rules differ. If your company joined the new savings scheme, payouts might change, so always confirm which plan applies before computing your gratuity.
Complete Example — UAE Gratuity Calculation for 7 Years 6 Months
Basic salary: AED 10,000
- First 5 years → 21 × 5 = 105 days
- Next 2.5 years → 30 × 2.5 = 75 days
Total gratuity days = 180 days
Daily wage = 10,000 ÷ 30 = 333.33
Total gratuity = 333.33 × 180 = AED 60,000
Very simple and very accurate.
Gratuity Calculation in Excel (Tutorial)
Why Excel Is the Smartest Way to Calculate Gratuity in UAE
Excel helps you avoid human mistakes. It shows every step, keeps the math clean, and helps you check HR calculations easily. You can also save your file as proof when discussing your settlement with HR.
Basic Excel Formula for Calculating Gratuity in UAE
Here is a simple, non-technical Excel method:
- Write your basic salary in one cell
- Write your total years of service in another
- Make a cell for daily wage:
Daily Wage = Basic Salary ÷ 30 - If your service is 5 years or less, use:
Gratuity Days = 21 × Years of Service - If you worked more than 5 years, use:
Gratuity Days = (21 × 5) + (30 × extra years) - Final gratuity:
Daily Wage × Total Gratuity Days
No confusing cell codes. Anyone can follow this.
How to Calculate Gratuity in UAE in Excel (Full Guide)
To build your own UAE gratuity calculation Excel sheet:
- Add input fields: basic salary, start date, end date
- Let Excel count your total service time
- Create a box for daily wage
- Add a simple IF rule:
- If years ≤ 5 → use 21 days/year
- If years > 5 → use 21 days for 5 years + 30 days for remaining
- Excel multiplies everything and gives your final amount
Save a copy and you’ll always have a trusted reference.
Creating a Custom UAE Gratuity Calculator Excel Sheet
Your custom calculator should include:
- Salary input
- Automatic service calculation
- Daily wage calculator
- Automatic gratuity day counter
- Final gratuity amount with clear breakdown
Use it whenever HR sends you a number you want to verify.
UAE Gratuity Excel Templates & Free Downloads
You can also use ready-made templates. Just make sure they follow current UAE rules because older ones (2017–2019) use outdated formulas. Always double-check before using them for real calculations.
6 Common Mistakes
Mistake 1 — Using Gross Salary Instead of Basic Salary
Many people calculate gratuity using total salary. This is wrong. Always use basic salary, or you will get the wrong amount.
Mistake 2 — Wrong Daily Rate or Wrong Excel Formula
Some people divide by 31 days instead of 30. Some use wrong Excel IF logic. One small mistake can reduce your gratuity by thousands.
Mistake 3 — Miscounting Years of Service or Probation
Unpaid leave or breaks in service are not counted. If HR removed months from your service, check your visa records and WPS salary history.
Mistake 4 — Using Outdated UAE Gratuity Formulas (2017–2019)
Old blogs and Excel sheets still use outdated rules. Avoid them. Always match your formula with the latest UAE labour law.
Mistake 5 — Wrong Sheet Setup or Incorrect IF Logic
If your Excel sheet doesn’t handle partial months, your numbers will be wrong. Test your sheet with example cases.
Mistake 6 — Ignoring Special Cases
Rules change for domestic workers, termination for cause, or unpaid leave days. Understand your specific case before calculating.
Special Gratuity Situations
Termination vs Resignation — Does the Formula Change?
Yes. Termination for cause and resignation rules can affect your entitlement. However, the main gratuity calculation formula remains the same. Always ask HR for a written settlement slip.
Gratuity Rules for Domestic Workers in UAE
Domestic workers follow different rules. Check your contract and MOHRE guidelines before calculating gratuity for these roles.
Annual Leave, Breaks, Deductions — How They Affect Gratuity
Unused annual leave is normally paid. But unpaid leave days may be deducted from your service. Always check your HR breakdown.
UAE Gratuity Calculation Tools, PDFs
Best UAE Gratuity Calculator Online Tools
Online calculators are useful, but always double-check with manual and Excel methods to make sure the results match your actual entitlement.
Printable UAE Gratuity Calculation Guide PDF
A simple PDF cheat sheet helps you keep all formulas and rules in one place. Useful when discussing settlement with HR.
FAQs About UAE Gratuity Formula
Q: Can I calculate gratuity online?
ANS: Yes, but confirm with manual or Excel.
Q: Is basic salary always used?
ANS: Mostly yes.
Q: How long does HR take to pay?
ANS: Usually within a short period after cancellation or final working day.
Q: What is the formula for calculating the gratuity?
ANS: Gratuity = (Basic salary ÷ 30) × total gratuity days.
You get 21 days’ pay per year for the first 5 years and 30 days’ pay per year after that.
Q: How much gratuity (%) is deducted from the salary?
ANS: No percentage is deducted from your monthly salary. Gratuity is paid by the employer at the end of service based on your basic pay.
Q: What is the new rule for gratuity in UAE?
ANS: The UAE now follows standard end-of-service rules for all private-sector workers, with the 21/30-day system and some companies offering an optional savings scheme.
Q: What is the formula for calculating gratuity?
ANS: Daily wage = basic salary ÷ 30, then multiply it by 21 or 30 days per year of service depending on how long you worked.
Final Checklist —
- Check your basic salary breakdown
- Verify the daily rate (basic ÷ 30)
- Compare manual + Excel results
- Save pay slips and contract
- Get HR’s final settlement in writing
- If the number looks wrong, raise a query with MOHRE
Conclusion — Calculate Every Dirham You Deserve
Don’t let a small mistake affect your payout. Understand the UAE gratuity calculation formula clearly, double-check your daily rate, and keep accurate records. If you need help, use an accurate gratuity calculation tool or download an updated Excel sheet to ensure your calculations are correct. Protect your rights and claim every dirham you worked hard for by using our online gratuity calculator to make sure you’re getting the amount you deserve.