How Much Gratuity Do You Get After 5 Years in the UAE?

By Harib Nadim · Founder, CalcUAE · Updated 21 July 2026

For a full-time foreign worker covered by the federal UAE Labour Law, five complete years of service earn 105 days of the last basic salary: 21 days for each of those five years.

If your last monthly basic salary is AED 10,000, the calculation is:

AED 10,000 ÷ 30 × 21 × 5 = AED 35,000

The 30-day rate begins only for service beyond five years. It does not revalue the first five years. That small distinction is the source of a surprising number of incorrect estimates.

Use the UAE gratuity calculator if you want the date calculation done for you. The sections below show the arithmetic and the details you should check before agreeing to a final settlement.

The formula in one table

The gratuity is calculated using the worker's last basic wage, not the total package. Housing, transport, utilities and similar allowances are not added to the calculation base.

Worked examples

Exactly 5 years on an AED 8,000 basic salary

• Daily basic wage: AED 8,000 ÷ 30 = AED 266.67
• Gratuity per year for the first five years: AED 266.67 × 21 = AED 5,600
• Five-year gratuity: AED 5,600 × 5 = AED 28,000

Exactly 5 years on an AED 15,000 basic salary

• Daily basic wage: AED 15,000 ÷ 30 = AED 500
• First five years: AED 500 × 21 × 5 = AED 52,500

5 years and 6 months on an AED 10,000 basic salary

Split the service into two bands:

• First five years: AED 10,000 ÷ 30 × 21 × 5 = AED 35,000
• Next six months: AED 10,000 ÷ 30 × 30 × 0.5 = AED 5,000
• Estimated total: AED 40,000

The extra six months use the 30-day rate because they fall after the fifth anniversary. The first five years remain at 21 days.

Use basic salary, not the amount that hits your bank

Suppose your monthly package is AED 18,000, split as follows:

• basic salary: AED 11,000;
• housing allowance: AED 5,000; and
• transport and other allowances: AED 2,000.

The statutory gratuity calculation starts from AED 11,000. At exactly five years, that gives:

AED 11,000 ÷ 30 × 21 × 5 = AED 38,500

Check the latest employment contract and any formal salary amendment. A payslip is useful evidence, but do not assume that a “net salary” or the combined transfer is the legal basic-wage figure.

The last basic wage applies to the calculation. If the basic salary changed during employment, the formula is not normally run year by year using each historical salary. This can make a late-career raise materially affect the gratuity.

Unpaid absence changes the service period

Days of unpaid absence are excluded from the service term used for gratuity. If the dates on your contract show five calendar years but you had 30 unpaid days, the gratuity service used in the calculation will be short of five full years by those 30 days.

This does not necessarily mean you lose gratuity. It changes the length of service and therefore the pro-rata amount. It also changes when service starts earning at the 30-day rate.

Ask HR for its service-day calculation if the figure differs from yours. Compare it with approved unpaid-leave records rather than arguing from anniversary dates alone.

Does resignation reduce the amount?

Not under the old one-third and two-thirds resignation scale people still quote online. That reduction belonged to the previous labour-law framework. For workers covered by the current federal regime, the standard 21-day and 30-day calculation is not discounted merely because the employee resigns.

Notice obligations are separate. If one party does not serve the required notice and no waiver is agreed, notice compensation may be due. The employer may also make deductions that are payable under law or a judgment, subject to the applicable rules. A deduction on the final statement should identify its basis; it should not be disguised as a lower gratuity rate.

Five years is not a cliff edge

There are two common misconceptions:

• “At five years, all years become 30 days.” They do not. The first five stay at 21 days each.
• “Leaving one day before five years wipes out the gratuity.” It does not, provided you completed at least one year. You receive the first-band amount on a pro-rata basis. What you have not yet begun is the higher accrual for service after five years.

The genuine cliff edge is one year of continuous service. Below that point, the standard statutory gratuity is not due.

What else belongs in the final settlement?

Gratuity is only one line. Depending on the circumstances, the final settlement may also include:

• salary up to the last working day;
• cash for eligible unused annual leave;
• notice pay or a notice-period adjustment;
• approved expenses or commissions already earned under the contract;
• deductions that are legally due; and
• a repatriation entitlement where applicable.

Keep those amounts separate when checking HR's calculation. A correct total can hide an incorrect gratuity line, and an accurate gratuity does not prove that the rest of the settlement is complete.

Article 53 of the federal Labour Law requires the employer to pay wages and other end-of-contract entitlements within 14 days from the end date of the contract.

Cases where this formula may not apply

This article is about the standard federal private-sector calculation for full-time foreign workers. Check the governing scheme before using it if you are:

• a UAE national covered by pension and social-security rules;
• employed in DIFC or ADGM, which have their own employment frameworks;
• enrolled by your employer in the voluntary alternative End-of-Service Benefits Savings Scheme;
• a domestic worker under separate legislation;
• working part-time or under another work pattern; or
• employed by a government entity.

Most ordinary free-zone employees outside DIFC and ADGM remain subject to the federal Labour Law, but the employment contract and zone rules should still be checked.

Before you sign the settlement

Use this short audit:

1. Confirm the legal start and end dates.
2. Deduct verified unpaid days from the service period.
3. Confirm the last basic wage from the current contract and payroll records.
4. Divide the basic wage by 30 for the daily rate.
5. Apply 21 days to the first five years and 30 days only to later service.
6. Check the pro-rata fraction used for incomplete years.
7. Review each deduction and the document supporting it.
8. Keep a copy of the calculation and final settlement before signing.

If the difference is just arithmetic, send HR a line-by-line calculation. If the employer disputes the basic wage, service dates or entitlement itself, that is no longer a calculator problem.

If the employer will not correct an underpayment

For a worker under MoHRE jurisdiction, start with the Ministry's labour-advisory and complaint channels. Have the employment contract, salary amendment, payslips, start and end dates, unpaid-leave record, termination or resignation letter, and the employer's settlement calculation ready.

DIFC and ADGM employment disputes go through their respective systems, not the ordinary MoHRE route. If you are unsure which rules govern the contract, resolve that first.

Frequently asked questions

How much is gratuity after exactly five years?

It is 105 days of the last basic wage: 21 days × 5 years. On a monthly basic salary of AED 10,000, that is AED 35,000.

What happens in the sixth year?

Only the service beyond five years earns at 30 days of basic wage per year. Six months into the sixth year earns 15 days of basic wage for that six-month portion.

Are housing and transport included?

No. The standard calculation uses the last basic wage and excludes allowances such as housing, transport and utilities.

Is there a maximum?

Yes. The federal Labour Law states that total end-of-service benefits for the foreign worker must not exceed two years' wage.

How soon must the employer pay?

The employer must pay wages and other end-of-contract entitlements within 14 days from the contract end date.

Does the calculator decide a legal dispute?

No. It estimates the statutory formula from the dates and salary entered. It cannot decide which contract applies, whether a deduction is lawful, or whether an alternative scheme governs the worker.

Official sources

• UAE Government: end-of-service benefits for private-sector workers
• MoHRE: Dear Worker—Know Your Rights
• Federal Decree-Law No. 33 of 2021 and amendments

Calculate your gratuity with your actual basic salary and dates, then compare the result line by line with the employer's statement.