UAE Gratuity Calculator | 2025

Gratuity is a crucial end-of-service benefit for employees in the United Arab Emirates (UAE). Understanding how gratuity is calculated ensures transparency and helps employees plan their finances better. This guide covers the gratuity calculation formula, eligibility criteria, benefits, and common FAQs for 2025.

1. What is Gratuity in UAE?

Gratuity is a lump-sum payment that employers provide to employees upon completing their service, as per UAE Labour Law. It is calculated based on the employee’s last basic salary and years of service. This financial benefit aims to reward employees for their dedication and service.

2. Why is Gratuity Important?

• Provides financial security after employment ends.
• Helps employees manage expenses during job transitions.
• Encourages long-term commitment to employers.
• Ensures legal compliance with UAE Labour Law.

3. Who is Eligible for Gratuity in UAE?

Employees are eligible for gratuity if they:

• Have completed at least 1 year of continuous service.
• Work under a full-time employment contract.
• Do not get terminated for misconduct (as per UAE Labour Law).

4. How is Gratuity Calculated in UAE?

Gratuity calculation depends on the type of contract (Limited or Unlimited) and the duration of service.

Gratuity Calculation Formula

For Employees with 1 to 5 Years of Service:

• 21 days' basic salary per year of service.

For Employees with More Than 5 Years of Service:

• 21 days' basic salary for the first 5 years.
• 30 days' basic salary for each additional year.

Example Calculation:

If an employee’s basic salary is AED 10,000 and they worked for 7 years, their gratuity would be:

• First 5 years: (10,000 ÷ 30) × 21 × 5 = AED 35,000
• Next 2 years: (10,000 ÷ 30) × 30 × 2 = AED 20,000
• Total Gratuity = AED 55,000

5. Gratuity Calculation for Limited vs. Unlimited Contracts

Contract Type	Less than 1 Year	1-3 Years	3-5 Years	More than 5 Years
Limited Contract	Not Eligible	21 days per year	21 days per year	21 days (first 5 years) + 30 days (after 5 years)
Unlimited Contract	Not Eligible	One-third of full gratuity	Two-thirds of full gratuity	Full gratuity

6. When is Gratuity Reduced or Forfeited?

Employees may lose gratuity if:

• They resign before completing 1 year.
• They are terminated due to misconduct.
• They resign under an unlimited contract before 5 years, leading to a partial reduction.
• They violate employment terms outlined in the contract.

7. How to Use an Online UAE Gratuity Calculator?

To quickly estimate your gratuity, use an online gratuity calculator by:

1. Entering your basic salary.
2. Selecting years of service.
3. Choosing the contract type (Limited or Unlimited).
4. Viewing the estimated gratuity amount.

Some reliable gratuity calculators include:

• Ministry of Human Resources & Emiratisation (MOHRE) website
• Bank and financial websites
• Official company portals with employee services

8. How to Claim Your Gratuity?

• After resignation or termination, submit a gratuity request to HR.
• The employer must process the gratuity within 14 days.
• In case of delays, employees can file a complaint with MOHRE.

9. FAQs on UAE Gratuity Calculation

1. Is gratuity calculated on basic salary or total salary?

Gratuity is calculated only on the last drawn basic salary, excluding allowances.

2. Can an employer refuse to pay gratuity?

No, as long as the employee meets the eligibility criteria, gratuity must be paid.

3. How long does it take to receive gratuity after resignation?

Gratuity must be settled within 14 days after the end of service.

4. Is gratuity taxable in UAE?

No, gratuity is not subject to tax in the UAE.

5. What happens to gratuity if an employee dies during service?

Gratuity is paid to the legal heirs of the deceased employee.

6. Can an employer deduct amounts from gratuity?

Employers can only deduct amounts if the employee has outstanding dues such as loans, advances, or violations of the contract.

10. Conclusion

The UAE Gratuity System ensures financial security for employees after completing their service. Understanding the gratuity calculation rules, eligibility, and contract types will help employees receive their rightful benefits. For accurate calculations, always refer to MOHRE or an online gratuity calculator.

For more details, visit the official UAE Labour Law website or consult HR experts in your company. Being aware of your rights ensures a smooth transition after employment.