Home / Gratuity Law 2021
The exact formula, the 2-year cap, and what changed for anyone who resigns.
Last reviewed: · General information, not legal advice
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 |
Gratuity is calculated on the last basic wage (Article 51(5)) — allowances like housing, transport or commission are not included. The usual method takes the daily wage as basic monthly salary ÷ 30. Article 51(6) caps the total at two years' wage, however long you actually worked; calculators, including ours, normally apply this as 24 months of basic salary.
Source: Federal Decree-Law No. 33 of 2021 and its amendments (official MOHRE English translation, PDF). The Arabic text prevails.
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. Article 51(6) says total gratuity may not exceed two years' wage, no matter how long you worked. It is usually applied as 24 months of basic salary, which is only reached after about 25.5 years of service.
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.
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