Have you decided to resign from your UAE job? Before submitting your resignation, are you wondering how much gratuity you’ll receive? To help you in a better way, we have come up with the easy-to-use Gratuity Calculator UAE. It can help you plan your finances better and ensure you get what you’re entitled to.

As you know, Gratuity or End of Settlement benefit is a lump-sum amount that your employer pays you for the services you have done, as outlined in the UAE labor law. This guide by The Dubai Street explains how you can calculate your gratuity in Dubai, so you can plan your resignation. The simple steps, formulas to calculate your gratuity can help you secure your rightful dues.

What is Gratuity in the UAE?

As mentioned above, Gratuity is a financial benefit paid by employers to their employees when they leave their job, as a thank-you note for the contributions they have made so far. Regulated by the UAE Labor Law, it applies to private sector employees working across the UAE, whether it is in a mainland or a free zone. For employees planning to resign or those who’ve already left, gratuity plays an important role in planning their finances, offering a safety net to secure their life until they find another job in Dubai.

Am I Eligible for Gratuity in Dubai?

Whether you work in the Mainland or a Free Zone, you’re eligible for a gratuity in Dubai. Before we start calculating your gratuity in Dubai, let’s check the eligibility for receiving gratuity.

• Minimum Service: Employees must have worked at least one year without any break with the employer.
• Type of Labor Contract: Both Limited and Unlimited Labor Contract holders qualify for getting gratuity.
• Resignation or Termination: Employees are entitled to receive gratuity from the employer, whether they resigned or were terminated, unless dismissed for misconduct.

For resigning employees, understanding these rules ensures you know what to expect. If you’ve already resigned, check your contract and service period to confirm eligibility.

READ MORE: Check Your Job Loss Insurance ILOE Fines in Dubai

How to Calculate Gratuity in Dubai?

The amount you receive as gratuity purely depends on your basic salary, years of service, and the contract type. Below, we have provided the formulas to calculate your gratuity in Dubai.

Formula to Calculate Gratuity in the UAE

Gratuity Calculator UAE for Unlimited Contracts

If you’re on an unlimited contract, the calculation varies based on your service duration, and resigning may reduce your gratuity if you’ve served less than 5 years.

1 to 5 Years of Service: 21 days’ basic salary per year.

  – If you resign: 1–3 years: Gratuity reduced by 1/3, and for 3–5 years: Gratuity reduced by 2/3.

Over 5 Years: 30 days’ basic salary per year beyond 5 years, plus 21 days for the first 5 years (no reduction).

– First 5 years: (Basic Salary ÷ 30) × 21 × Years of Service × (Reduction Factor if Resigning)
– Beyond 5 years: (Basic Salary ÷ 30) × 30 × Additional Years

Example: (Resigning after 4 years):

– Basic salary: AED 12,000
– Service: 4 years
Gratuity: (12,000 ÷ 30) × 21 × 4 × (2/3) = AED 22,400 (2/3 due to resignation)

Gratuity Calculation for Limited Contracts

For limited contract holders, the calculation is simpler, but resigning before the contract ends may lead to no gratuity unless you’ve completed one year.

– 1 to 5 Years: 21 days’ basic salary per year.
– Over 5 Years: Capped at 3 years’ basic salary.

Formula: (Basic Salary ÷ 30) × 21 × Years of Service

Example (Resigned after 3 years):

– Basic salary: AED 12,000
Gratuity: `(12,000 ÷ 30) × 21 × 3 = AED 25,200`

Key Points for Calculating Gratuity in Dubai

• Kindly note that they will consider only your basic salary, excluding housing allowances and transport allowances, etc.
• When we calculate your gratuity, the amount should not exceed your two years’ basic salary.
• If you worked in a company for 6 months, after one year, your gratuity will be calculated, and you will get paid.

Try the UAE Gratuity Calculator to Calculate your EOS

To know your gratuity amount, use an online UAE gratuity calculator. This tool just requires your basic salary, service years, and contract type to estimate your payout.

FAQs About Gratuity Calculation in Dubai

Here are answers to 10 common questions employees planning to resign or who’ve resigned ask about gratuity:

Can I get gratuity if I resign after one year?

Yes, you will get gratuity after one year, but if you resign on an unlimited contract with less than 5yrs, it may reduce your gratuity amount.

How is gratuity calculated if I resign?

For unlimited contracts, it’s 21 days’ basic salary per year. For limited contracts, it’s 21 days per year, but resigning early may affect entitlement unless agreed otherwise.

What salary is used for gratuity calculation?

The gratuity calculation is purely based on your basic salary, excluding allowances like housing and transportation.

Is there a maximum gratuity limit?

Yes, there is a maximum gratuity limit. As said, the full amount cannot exceed two years' basic salary.

What if my employer doesn’t pay my gratuity?

If your employer doesn't pay your gratuity on time, you can file a complaint with MOHRE or approach the Dubai Labour Court for assistance.

Do I lose gratuity if I resign early on a limited contract?

If you resign before completing your limited contract, you will lose the opportunity to receive your gratuity.

How is partial-year service calculated?

After one year, partial years are calculated proportionately (e.g., 6 months = 0.5 years).

Is gratuity taxable in Dubai?

No, gratuity is tax-free in the UAE.

Can I use a gratuity calculator to plan my resignation?*

Yes, online calculators help you calculate your gratuity, helping with financial planning before resigning.

Do free zone employees get gratuity?

Yes, free zone employees (e.g., DMCC, JAFZA) are entitled, but rules may vary by free zone authority.

Keep following The Dubai Street to learn what steps to take if your employer hasn’t paid your End of Service Gratuity.