UAE Gratuity Law: The Ultimate Guide to End of Service Benefits (2026)

What is End of Service Gratuity?

End of Service Gratuity — commonly referred to as "gratuity" or "EOSG" — is a mandatory lump-sum payment that every foreign employee in the UAE is legally entitled to receive when their employment ends. It is not a bonus or a discretionary payment; it is a statutory right protected under UAE Federal Decree-Law No. 33 of 2021.

Think of it as the UAE government's way of rewarding employees for their years of service and ensuring that expat workers — who may not have access to a pension scheme — have a financial safety net when they leave a job. Whether you resign, are terminated, or your contract expires naturally, you are entitled to gratuity as long as you have completed at least one continuous year of service.

The calculation is based on your Basic Salary only. Housing allowances, transport allowances, utility allowances, and any other add-ons are excluded from the gratuity base. This is one of the most commonly misunderstood aspects of the calculation — confirm what your basic salary actually is before using any calculator.

What Counts as Basic Salary?

Your payslip may show a total package of AED 15,000, but if your basic salary is only AED 7,000, your gratuity is calculated on AED 7,000 — not the full amount. This distinction can cost you thousands of dirhams if you are not aware of it.

If your contract does not separately list a basic salary and only shows a total salary, the entire amount may be treated as basic salary for gratuity purposes. Clarify this with your HR department in writing before your last day.

Resignation vs. Termination: Does It Still Matter?

Under the old UAE Labor Law, whether you resigned or were terminated significantly affected your final gratuity — especially on Unlimited Contracts. Employees who resigned before 5 years could lose one-third or even two-thirds of their entitlement.

Under the New Labor Law (2022 onwards), this penalty has been removed for private sector employees. As long as you complete your notice period and have served at least one year, you receive the full gratuity amount — regardless of whether you resigned or were let go.

When and How is Gratuity Paid?

Your employer is legally required to pay gratuity on your last working day or promptly after. In practice it is usually processed with your final salary payment. If your employer delays or refuses to pay, you have the right to file a complaint with MOHRE online at mohre.gov.ae or by calling their hotline at 800-60. MOHRE complaints are typically resolved within 30 days.

Gratuity is also protected if your employer goes bankrupt or shuts down operations. The UAE's Wage Protection System (WPS) provides a layer of protection for unpaid wages and end-of-service benefits in such circumstances.

Special Cases: Part-Time, Domestic Workers and Transfers

The New Labor Law extended gratuity rights to part-time workers for the first time. Part-time employees receive gratuity calculated proportionally based on their actual working hours compared to a full-time equivalent.

Domestic workers (housemaids, drivers, nannies) are covered under the separate Federal Law No. 10 of 2017 on Domestic Workers. They are entitled to one month's wage per year of service after completing two years with the same employer.

If you transfer between companies in the same group, your years of service typically continue to accumulate — but only if there was no formal gratuity settlement at the point of transfer. Always ask HR to confirm this in writing to avoid disputes later.

Real Calculation Examples

These are based on actual questions sent to us by readers. Names changed for privacy.

Common Questions