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End of service gratuity (EOSB) is a mandatory payment employers in all GCC countries must pay when employment ends. The formula differs by country, years of service, and the reason for leaving.
UAE Gratuity Formula — Federal Decree-Law No. 33 of 2021 (Current Law)
UAE gratuity is calculated on basic salary only — housing, transport, food, and all other allowances are excluded. Under the 2022 law, gratuity entitlement is the same whether you resign or are terminated — the old resignation penalty was abolished.
| Service Period | Gratuity Entitlement (Resignation or Termination) |
|---|---|
| Under 1 year | No gratuity |
| 1–5 years | Full (21 working days per year of basic salary) |
| Beyond 5 years | Full (30 working days per year of basic salary) |
| Maximum cap | 2 years' total basic salary (regardless of service length) |
Gratuity is not payable if the employee is terminated for gross misconduct under Article 44. Employers must settle all dues within 14 days of the last working day.
Worked Example — 7 Years at AED 10,000 Basic
| Calculation Step | Amount |
|---|---|
| Daily basic rate (AED 10,000 ÷ 30) | AED 333.33 |
| First 5 years: 5 × 21 days × AED 333.33 | AED 35,000 |
| Next 2 years: 2 × 30 days × AED 333.33 | AED 20,000 |
| Total gratuity | AED 55,000 |
GCC Country Comparison
| Country | Formula (First 5 yrs) | Formula (After 5 yrs) | Resignation Penalty |
|---|---|---|---|
| 🇦🇪 UAE | 21 days/year | 30 days/year | 1/3 – 2/3 before 5 yrs |
| 🇸🇦 Saudi | ½ month/year | 1 month/year | 1/3 – 2/3 before 10 yrs |
| 🇰🇼 Kuwait | 15 days/year | 30 days/year | 0 if under 5 yrs |
| 🇶🇦 Qatar | 21 days/year | 30 days/year | 0 if under 1 yr |
| 🇧🇭 Bahrain | ½ month/year | 1 month/year | 0 if under 1 yr |
| 🇴🇲 Oman | 15 days/year | 30 days/year | 0 if under 1 yr |
Free Zone Employees (DIFC & ADGM)
The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) operate under their own employment laws:
- DIFC: Employees hired after February 2020 are enrolled in the DIFC Employee Workplace Savings (DEWS) scheme — a funded savings plan replacing traditional gratuity. Contributions: 5.83% of monthly basic (under 5 years) or 8.33% (5+ years)
- ADGM: Follows the ADGM Employment Regulations 2019 with a minimum gratuity of 21 days per year based on basic salary, with no resignation penalty after 1 year
- Other free zones (JAFZA, DAFZA, Sharjah FZ, etc.) follow the UAE Federal Labour Law unless their own charter specifies otherwise
What to Do If Your Employer Withholds Gratuity
Under UAE Labour Law, your employer must pay all end-of-service entitlements within 14 days of your last working day. If they fail to do so:
- Send a formal written demand by email, keeping a copy
- File a complaint with MOHRE — call 800-60 or use the MOHRE app (free, resolves most disputes in 2–4 weeks)
- If MOHRE mediation fails, the case is referred to the Labour Court automatically at no filing cost to you
- Courts may award interest and legal costs in addition to the unpaid gratuity