Many people in the UAE still believe that resigning costs them a third or two thirds of their gratuity. That was true under the old labour law. Since Federal Decree-Law No. 33 of 2021 took effect in February 2022, it isn't: once you've completed one year of continuous service, you get the same gratuity whether you resign or your employer ends the contract.
How UAE gratuity is calculated
Gratuity is based on your last basic salary. Divide the monthly basic by 30 to get a daily wage. You earn 21 days of that wage for each of your first five years, and 30 days for each year after. Part-years count in proportion once the first year is complete.
Daily basic wage
AED 10,000.00 ÷ 30equalsAED 333.33
First 5 years
5 × 21 days × AED 333.33equalsAED 35,000.00
Later years
1 × 30 days × AED 333.33equalsAED 10,000.00
Gratuity
AED 35,000.00 + AED 10,000.00equalsAED 45,000.00
Resigning after six years on that salary pays exactly the same AED 45,000. Under the old law, someone resigning on an unlimited contract before five years could lose most of it; that distinction is gone.
What counts as basic salary
Only the basic salary in your MOHRE-registered contract. Housing, transport and other allowances, commission, bonuses and overtime are all excluded. This is the most common reason people expect a bigger payout than they receive: if your package is AED 18,000 but your basic is AED 10,000, the gratuity is based on AED 10,000.
- Less than one year of service: no gratuity.
- One year or more: full gratuity, resignation or termination alike.
- Unpaid leave doesn't count toward service.
- Dismissal for serious misconduct under the law can forfeit gratuity.
- The total is capped at two years' wage, which only matters after very long service.
When it must be paid
Employers must settle gratuity and other final dues within 14 days of the contract ending. If payment is late or disputed, you can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE).
Where the rules differ
DIFC employers pay into a workplace savings scheme instead of end-of-service gratuity, some free zones have their own employment rules, and domestic workers are covered by a separate law. If you work in Saudi Arabia instead, the rules are very different: the award uses your full wage including fixed allowances, and resigning before ten years does reduce it.
Tip: Check the basic salary figure on your registered contract before you plan around a gratuity amount. It's the single number that decides the result.