15 July 2026 · Lifeguard Payroll
How UAE end-of-service gratuity is calculated
The 21/30-day formula, the two-year cap, and the mistakes that turn a simple calculation into a dispute.
End-of-service gratuity in the UAE follows a formula set out in the Labour Law. It sounds simple, and it is — the disputes almost always come from getting the inputs wrong.
The formula
For the first five years of service, an employee earns 21 days of basic salary per year. From year six onwards, that becomes 30 days per year. The daily wage is the monthly basic salary divided by 30.
Basic salary only
Gratuity is calculated on the last basic salary — not the total package. Housing, transport and other allowances are excluded. This is the most common place calculations go wrong.
The two-year cap
However long the service, the total gratuity cannot exceed two years' wages. It must be paid within 14 days of employment ending, along with any other final dues.