Home / Gratuity Law 2021
The exact formula, the 2-year cap, and what changed for anyone who resigns.
Every gratuity figure on this site — and every gratuity payment made by a mainland UAE employer — is governed by one law: Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, which came into effect on 2 February 2022. It replaced the older Federal Law No. 8 of 1980 and modernised several parts of UAE employment law, including how end-of-service gratuity is worked out.
If you have completed at least 1 year of continuous service, you are entitled to gratuity calculated as:
| Years of service | Gratuity per year |
|---|---|
| First 5 years | 21 days of basic salary, per year |
| Every year beyond 5 | 30 days of basic salary, per year |
Your daily wage for this calculation is your basic monthly salary ÷ 30 — allowances like housing, transport or commission are not included. The total is capped at 2 years' worth of basic wage, however long you actually worked.
Work out my exact gratuity →The most significant practical change for most people is this: under the old 1980 law, employees on unlimited contracts who resigned (rather than being terminated) had their gratuity cut on a sliding scale — as little as one-third of the full amount after 1-3 years of service, two-thirds after 3-5 years, and full gratuity only after 5+ years.
Federal Decree-Law No. 33 of 2021 removed that reduction entirely. Today, whether you resign or are terminated makes no difference to your gratuity amount, as long as you completed at least 1 year of continuous service. The only thing that still matters is your length of service and your basic salary.
It is the current UAE labour law that took effect on 2 February 2022, replacing the older Federal Law No. 8 of 1980. It governs mainland UAE employment contracts, including end-of-service gratuity, notice periods, working hours and leave.
Yes. Under Federal Decree-Law No. 33 of 2021, resignation no longer reduces your gratuity. Anyone with more than 1 year of continuous service receives the full 21/30-day calculation, regardless of whether they resigned or were terminated.
Yes, gratuity is capped at 2 years' worth of basic wage, no matter how many years you worked beyond that point.
Under the old Federal Law No. 8 of 1980, employees on unlimited contracts who resigned (rather than were terminated) had their gratuity reduced on a sliding scale — as little as one-third after 1-3 years of service. That reduction was removed entirely under the 2021 law.