💰 UAE Gratuity After 5 Years Calculator 2026

After exactly 5 years of service, your gratuity equals 21 days of basic salary per year. The formula is: (Basic Salary ÷ 30) × 21 × 5 years. For example, with AED 10,000 basic salary, you receive (10,000 ÷ 30) × 21 × 5 = AED 35,000. This equals 3.5 months of your basic salary or approximately 105 days of pay total. The amount is based only on basic salary, excluding housing allowance, transportation, or other benefits. Both limited and unlimited contract holders receive the same calculation for 5 complete years of service.

Gratuity is calculated ONLY on your basic salary, not your total package or gross salary. Housing allowance, transportation allowance, phone allowance, and other benefits are excluded from the calculation. This is why it's important to negotiate a higher basic salary component when joining a company, even if the total package remains the same. For example, a package of AED 15,000 split as AED 8,000 basic + AED 7,000 allowances will give less gratuity than AED 11,000 basic + AED 4,000 allowances, even though the total is identical. Always check your employment contract to confirm your basic salary amount.

Yes, you get gratuity if you resign before 5 years, but the amount depends on your contract type and service duration. For limited contracts: you receive full gratuity after completing 1 year, regardless of who terminates. For unlimited contracts: after 1 year you get full gratuity if employer terminates; if you resign voluntarily before 5 years, reductions apply: 1-3 years service = one-third of calculated gratuity, 3-5 years service = two-thirds of calculated gratuity, 5+ years = full gratuity regardless. Once you complete 5 years on an unlimited contract, you receive full gratuity even if you resign.

According to UAE Labour Law, employers must pay your end of service gratuity within 14 days from the date your employment ends. This applies whether you resign, are terminated, or your contract expires. The payment should be made in full unless there are agreed deductions for outstanding loans or advances. If your employer fails to pay within 14 days, you can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE). The gratuity is typically paid via bank transfer to your account. Ensure you provide correct bank details and obtain a gratuity calculation breakdown for your records.

The maximum gratuity amount is capped at two years' worth of basic salary (24 months). For example, if your basic salary is AED 20,000, the maximum gratuity you can receive is 24 × 20,000 = AED 480,000, regardless of how many years you work. This cap typically affects employees who work 15+ years. To reach the cap with normal calculation: it takes approximately 16.7 years of service (5 years at 21 days + 11.7 years at 30 days ≈ 24 months). If you work 20+ years at the same basic salary, you would still receive only the 24-month maximum. However, if you receive salary increases over the years, the cap recalculates based on your latest basic salary.

Employers can only deduct from your gratuity in specific circumstances permitted by UAE Labour Law: outstanding loans or salary advances you received from the employer, damages you caused to company property (must be proven), penalties for notice period violations if you didn't serve proper notice, and any other amounts you owe the company that are documented in writing. However, employers CANNOT deduct for normal business losses, training costs (unless specifically agreed in contract), recruitment fees, or arbitrary penalties. The total deductions cannot exceed what you legally owe. If you believe deductions are unfair, you can dispute them through MOHRE. Always request a detailed breakdown of any deductions from your final settlement.

Yes, unpaid leave periods are excluded from your total service duration when calculating gratuity. Only periods of continuous paid service count toward your gratuity. For example, if you worked for 5 years but took 3 months of unpaid leave, your service period for gratuity would be 4 years and 9 months, not 5 years. This is why it's important to track all unpaid leave carefully. Paid annual leave, sick leave, and public holidays do not affect your gratuity calculation – they count as continuous service. Maternity leave is also considered continuous service. When you resign, verify your total service period with HR and account for any unpaid leave to ensure accurate gratuity calculation.

For incomplete years, you receive pro-rata gratuity based on the months worked. The calculation divides the annual gratuity entitlement by 12 and multiplies by months worked. Example: If you worked 5 years and 7 months with AED 10,000 basic salary: First 5 complete years = (10,000 ÷ 30) × 21 × 5 = AED 35,000. Additional 7 months (after 5 years, so 30 days apply) = (10,000 ÷ 30) × 30 × (7 ÷ 12) = AED 5,833. Total gratuity = AED 40,833. The law entitles you to gratuity for any fraction of a year worked, provided you completed at least one full year of service. Always calculate incomplete months to ensure you receive the full amount owed.