🇦🇪 UAE Gratuity Law 2026

UAE gratuity formula: Daily rate = Basic Salary ÷ 30. First 5 years: Daily rate × 21 days × Years of service. After 5 years: Daily rate × 30 days × Years of service (beyond 5 years). Total gratuity = Sum of both periods [web:24][web:30]. Example: AED 12,000 basic salary for 7 years. Daily rate = 12,000 ÷ 30 = AED 400. First 5 years: 400 × 21 × 5 = AED 42,000. Years 6-7: 400 × 30 × 2 = AED 24,000. Total full gratuity = AED 66,000. Maximum cap: Cannot exceed 2 years total salary [web:24]. This formula applies to monthly-paid employees under Federal Decree-Law No. 33 of 2021.

No, only basic salary counts for gratuity calculation in UAE [web:24]. Excluded allowances: housing allowance, transport allowance, phone allowance, food allowance, education allowance. Also excluded: overtime pay, bonuses, commissions, tips. Example: Package AED 18,000 = AED 12,000 basic + AED 4,000 housing + AED 2,000 transport. Gratuity calculated on AED 12,000 ONLY [web:24]. However, the 2-year maximum cap uses total salary including allowances [web:24]. This is why salary package structure matters - higher basic salary means higher gratuity. When negotiating employment, request maximum amount as basic salary rather than allowances for better gratuity benefits.

UAE law requires employers to pay gratuity within 14 days from the employee's last working day [web:29]. This is mandatory under Federal Decree-Law No. 33 of 2021. The 14-day period includes weekends and public holidays (calendar days, not working days) [web:29]. Timeline starts from your last physical working day, not resignation submission date. If employer doesn't pay within 14 days: Send written demand, File complaint with MOHRE (Ministry of Human Resources and Emiratisation), File online at mohre.gov.ae or visit Tasheel center, No fee for labor complaints, MOHRE schedules conciliation within 2-3 weeks, Employer faces penalties for non-compliance [web:29]. Most gratuity disputes resolve within 3-6 weeks through MOHRE conciliation. Keep documentation: employment contract, payslips, resignation letter, bank statements.

Depends on contract type and service duration. Limited (fixed-term) contract: YES, 100% gratuity upon completion regardless of who ends it [web:23]. Unlimited contract resignation: Less than 1 year = Zero. 1-3 years = Zero. 3-5 years = 33.33% (one-third) of calculated gratuity. 5+ years = 100% full gratuity [web:23]. Example: Resign after 4 years with AED 10,000 basic salary. Calculated gratuity = (10,000 ÷ 30) × 21 × 4 = AED 28,000. You receive: 28,000 × 1/3 = AED 9,333 (one-third). If employer terminates you at any time = 100% regardless of service duration [web:23]. UAE's 5-year threshold for full resignation rights is better than Kuwait (10 years) and Saudi Arabia (10 years). Strategic tip: If planning to resign around 5-year mark, complete full 5 years for 100% vs losing 67% by leaving earlier.

UAE law caps maximum gratuity at 2 years of total salary (not just basic) [web:24]. This cap typically requires 20+ years of continuous service to reach. Example calculations: AED 15,000 total salary = Maximum cap AED 360,000 (reached after ~21 years). AED 25,000 total salary = Maximum cap AED 600,000 (reached after ~21 years). Most employees (5-15 years service) never reach this cap and receive full calculated gratuity. The cap uses total package including allowances, making it more generous. Compare to other GCC: UAE = 2 years total salary cap. Kuwait = 18 months monthly salary cap. Qatar = 2 years total salary cap (similar to UAE). Saudi Arabia = No specific cap (unlimited). For typical employee with 10 years service and AED 12,000 basic salary: Calculated gratuity = AED 102,000. Maximum cap = 24 months × total package (if AED 18,000 total) = AED 432,000. Cap not reached, receive full AED 102,000.

Employers can only make specific legal deductions from UAE gratuity. Legally allowed deductions: Outstanding loans or salary advances with documentation [web:29], Proven damages caused by employee negligence (must be documented), Notice period shortfall if you left without serving proper notice, Work permit/visa costs if contract clause specifies. NOT allowed deductions: Training costs (unless specific contract terms), General equipment usage or wear-and-tear, Performance penalties or subjective damages, Company losses or business problems, Accommodation costs unless specified in contract. Burden of proof on employer [web:29]. For any deduction, employer must provide: Written justification with legal basis, Supporting documentation (loan agreement, damage assessment), Detailed calculation showing deduction amount. If deductions seem unfair, include in MOHRE complaint. Many employers make illegal deductions hoping employees won't challenge. Your final settlement statement must itemize all deductions. UAE law protects gratuity as earned right - arbitrary deductions are illegal and recoverable through labor courts.

File UAE gratuity complaints with MOHRE (Ministry of Human Resources and Emiratisation). Methods: Online filing: mohre.gov.ae portal (fastest method) [web:22][web:23], UAE Pass app for digital submission, Tasheel centers: Available across all emirates for in-person filing, MOHRE offices: Direct filing at ministry branches. Required documents: Employment contract (preferably Arabic version), Salary certificates or payslips (last 12 months), Bank statements showing salary deposits, Resignation letter and acceptance, Your gratuity calculation, ID copy (Emirates ID or passport). Process: Submit complaint online or in-person, Get case reference number, MOHRE contacts employer within 3-5 days, Conciliation meeting scheduled within 2-3 weeks, Both parties present evidence and negotiate, If settled: Agreement signed, payment within specified timeline, If not settled: Case referred to labor court. Cost: FREE to file labor complaint [web:22]. No legal fees required for initial filing. Helpline: 600 590 000 (MOHRE call center, Arabic/English available). Success rate high (85-90%) with proper documentation.

No, gratuity is NOT taxed in UAE. The country has no personal income tax on salaries or end-of-service benefits for employees (nationals or expatriates). You receive your full calculated gratuity amount without any government tax deductions. UAE remains tax-free jurisdiction for employment income. However, employers may deduct legitimate amounts with documentation: outstanding loans, proven damages, notice period shortfall. But there's no income tax, gratuity tax, or government tax on your gratuity payment. Example: If entitled to AED 100,000 gratuity, you receive full AED 100,000 (minus only legitimate contractual deductions like loans). This applies equally to: UAE nationals, Expatriate employees, All emirates (Dubai, Abu Dhabi, Sharjah, etc.), Mainland and free zone companies. If repatriating to your home country, check home country's tax rules on foreign income - some countries tax worldwide income when you return, but UAE itself imposes no tax. The tax-free nature of UAE gratuity is major benefit making UAE attractive employment destination.