UAE Gratuity Calculator 2026 — Complete Guide for Employers & Employees
End-of-service gratuity is one of the most miscalculated employee rights in the UAE. Whether you are an HR manager or an employee planning to resign, getting the gratuity calculator UAE 2026 formula right prevents disputes and protects both sides. This guide covers the full formula, resignation rules, part-time entitlements, DEWS, common mistakes, and dispute resolution — all in one place.
The Legal Basis
End-of-service gratuity (EOSB) is governed by Federal Decree-Law No. 33 of 2021:
- Entitlement starts from day one of employment
- Calculated on basic salary only — housing, transport, and other allowances excluded
- Minimum 1 full year of service required to qualify
The Gratuity Formula 2026
Daily rate = Basic Monthly Salary ÷ 30
- Years 1–5: 21 calendar days × years served
- Years 6+: 30 calendar days × years served
- Cap: 2 years' total annual salary
Worked Example
AED 10,000 basic salary, 7 years, employer-terminated:
- Years 1–5: 5 × 21 × (10,000 ÷ 30) = AED 35,000
- Years 6–7: 2 × 30 × (10,000 ÷ 30) = AED 20,000
- Total: AED 55,000
Partial years count proportionally.
3 Mistakes to Avoid
- Using total salary instead of basic salary
- Not recalculating provisions after a salary increase — gratuity uses the final basic salary
- Applying resignation reductions to employer-initiated terminations
Resignation vs. Termination
Employer terminates: Full gratuity from year one, pro-rated for partial years.
Employee resigns:
- Under 1 year: no gratuity
- 1–3 years: one-third
- 3–5 years: two-thirds
- 5+ years: full gratuity
Other cases: Mutual agreement and fixed-term contract expiry pay full gratuity. Constructive dismissal is treated as arbitrary — full gratuity plus minimum 3 months' compensation. Gross misconduct termination may forfeit gratuity only with documented warnings on file.
Gratuity for Part-Time, Flexible, and Remote Workers
Competitors rarely cover this — and it is a growing MOHRE dispute trigger in 2026.
- Part-time: Accrues proportionally to contracted hours vs. full-time equivalent
- Flexible/remote: Accrues on the contractual schedule — informal arrangements are not accepted in disputes
- Job-share: Each employee accrues independently on their own hours and basic salary
Audit every non-standard arrangement and confirm gratuity is provisioned at the correct proportional rate.
DEWS vs. Traditional Gratuity
- Traditional (mainland default): Lump-sum liability sits on the employer's balance sheet until departure
- DEWS: Monthly employer contributions to a regulated savings fund — portable, transparent, removes balance sheet risk
DEWS is mandatory in the DIFC, voluntary on the mainland. Mainland employers interested in DEWS-style schemes need a UAE-licensed pension provider and MOHRE-aligned contract amendments.
Filing a Gratuity Dispute with MOHRE
- File free at mohre.gov.ae, the MOHRE app, or a service centre
- MOHRE assigns a mediator within ~14 working days
- If unresolved within 30 days — automatic Labour Court referral
- Claims under AED 100,000 use an expedited small claims process
Deadline: 1 year from the last working day. Clean WPS records significantly strengthen the employer's defence.
How Mai HRMS Automates Gratuity
Mai HRMS eliminates manual calculation risk:
- Daily provisioning on current basic salary, exact service date, and work arrangement type
- Auto-recalculates when salary changes
- Applies correct resignation or termination reduction instantly
- Proportional accrual built in for part-time and flexible workers
- Audit-ready, timestamped records exportable for MOHRE inspections
- AI Assistant — ask "What is Sarah's gratuity if she resigns today?" for an instant answer
Start your 30-day free trial — no credit card required.
Compliance Checklist
- Provisions on basic salary only — not total package
- Part-time and flexible workers provisioned proportionally
- Provisions updated after every salary increase
- Correct exit type applied to each leaver
- Final settlement paid within 14 days of last working day via WPS
- DIFC employees enrolled in DEWS
- Flexible worker schedules documented on file
- Records kept for at least 1 year post-employment
Frequently Asked Questions
How do I calculate gratuity in the UAE in 2026?
Divide basic monthly salary by 30. Multiply by 21 days per year for the first five years, and 30 days per year beyond five. Cap at two years' total annual salary.
Is gratuity calculated on basic or total salary?
Basic salary only — housing, transport, and allowances are excluded unless the contract states otherwise.
Do I get gratuity if I resign?
Yes, at a reduced rate. Under 1 year: none. 1–3 years: one-third. 3–5 years: two-thirds. 5+ years: full gratuity.
Do part-time employees get gratuity?
Yes — proportionally, based on contracted hours relative to full-time equivalent.
What is the maximum gratuity payout?
Two years' total annual salary, regardless of length of service.
What if my employer doesn't pay gratuity?
File a free MOHRE complaint online or via the app. Conciliation takes ~14 days; unresolved cases go to Labour Court automatically. You have 1 year from your last working day to file.
What is DEWS?
DEWS replaces the lump-sum gratuity with monthly employer contributions to a regulated savings fund. Mandatory in the DIFC, voluntary on the UAE mainland.
Is UAE gratuity taxable?
No personal income tax applies in the UAE. Employers should consult a tax advisor on corporate tax treatment of accrued gratuity liabilities.
For informational purposes only, reflecting UAE legislation as of June 2026. Consult a qualified UAE employment lawyer for business-specific advice.
Last updated: June 2026 by the Mai HRMS editorial team.
