Home / Gratuity After 5 Years
Passing five years raises your rate — but only for the years that follow. Here is the mistake almost everyone makes.
Federal Decree-Law 33/2021 sets two rates: 21 days of basic pay per year for the first five years, and 30 days per year thereafter. A very common assumption is that once you cross five years, the whole period is recalculated at 30 days.
It is not. The bands are cumulative, not retroactive. Your first five years stay at 21 days permanently; only the sixth year onward earns 30.
| Service | Correct calculation | Common wrong answer |
|---|---|---|
| 6 years | (5 × 21) + (1 × 30) = 135 days | 6 × 30 = 180 days |
| 10 years | (5 × 21) + (5 × 30) = 255 days | 10 × 30 = 300 days |
| 15 years | (5 × 21) + (10 × 30) = 405 days | 15 × 30 = 450 days |
On a basic salary of AED 6,000, the ten-year difference between the correct and the wrong figure is AED 9,000 — enough to be worth understanding before you sign a settlement.
Basic salary AED 9,000, so the daily wage is 9,000 ÷ 30 = AED 300.
5 × 21 × 300 = AED 31,500
So the sixth year is worth about 43% more per month than the fifth. There is no cliff or bonus at the five-year mark — just a higher rate from that point forward.
Total gratuity cannot exceed two years' wages. People worry about this far more than they need to. Working through it:
The cap therefore only bites at roughly 25.5 years of continuous service with one employer. For the overwhelming majority of employees it is irrelevant.
| Factor | Effect on your gratuity |
|---|---|
| Resigning rather than being terminated | None — since February 2022 |
| A salary increase during service | Calculated on your last basic salary, so a rise raises the whole figure |
| Unpaid leave | Does not count as service, so it reduces the total |
| Paid annual leave | Counts normally |
| Allowances (housing, transport) | Excluded — basic salary only |
| Probation period | Counts towards service once you pass one year overall |
The salary point is worth dwelling on. Because gratuity uses your final basic salary rather than an average, a promotion shortly before leaving increases the value of every prior year. This is the single largest lever on the final number, and it is the opposite of how funded schemes such as DIFC's DEWS work.
No. The rate rises from 21 to 30 days per year, but only for years after the fifth. Your first five years remain at 21 days each and are not recalculated.
255 days of basic pay: five years at 21 days (105 days) plus five years at 30 days (150 days). On a basic salary of AED 6,000, that is roughly AED 51,000.
Yes, at two years' total wages. In practice that ceiling is only reached after roughly 25 years of continuous service with the same employer, so it rarely applies.
Your last basic salary. A pay rise late in your service therefore increases the value of all your earlier years, which makes final-salary gratuity notably generous for long-serving employees who have been promoted.
Yes, provided you go on to complete at least one year of continuous service overall. Probation is part of your service, not separate from it.
Not in terms of gratuity — the calculation is identical either way. Termination may give rise to separate claims, such as compensation for arbitrary dismissal, but the gratuity figure itself does not change.