End-of-service gratuity in the UAE
An expatriate on the UAE mainland who completes one year's continuous service is owed 21 days' basic wage per year for the first 5 years and 30 days per year after that, capped at two years' wage and paid within 14 days of leaving. Employers can opt into MoHRE's Savings Scheme instead. The DIFC replaces most of the gratuity with monthly contributions, and Emiratis receive a pension rather than a gratuity.
End-of-service benefits in the UAE
- Gratuity on basic wage
- Final dues paid within 14 days
- Savings or Qualifying Scheme contributions
DIFC amends its end-of-service rules for UAE and GCC nationals
What happened
The DIFC Laws Amendment Law, DIFC Law No. 1 of 2025, was enacted on 8 July 2025. It amended the wording of Articles 65 and 66 of the DIFC Employment Law, which cover the pension top-up for UAE and GCC nationals and Qualifying Scheme contributions. The 5.83% and 8.33% contribution rates did not change.
What it means for you
A DIFC employer of UAE or GCC nationals pays their GPSSA pension and, where that is less than the Qualifying Scheme contribution an expatriate would receive, pays the difference into a Qualifying Scheme once it reaches AED 1,000 a month.
Dates to know
- 1 February 2020DIFC Qualifying Scheme contributions began for existing employees
- 8 July 2025DIFC Laws Amendment Law, DIFC Law No. 1 of 2025 enacted
Source: Dubai International Financial Centre. We check this page every week. Last checked .
The end-of-service gratuity is a lump sum the UAE Labour Law requires an employer to pay a full-time expatriate employee when employment ends, provided the employee has completed at least one year of continuous service. It is calculated on the last basic wage, which excludes allowances such as housing, transport and utilities, at 21 days' basic wage for each of the first 5 years and 30 days' basic wage for each later year, pro rata for part years, and the total may not exceed two years' wage. The employer may deduct amounts the employee owes and must pay within 14 days of the contract ending. UAE nationals receive end-of-service benefits under the pensions and social security legislation instead. Three alternatives sit beside the statutory gratuity: MoHRE's voluntary Savings Scheme, where the employer pays monthly into an approved investment fund; the DIFC's mandatory Qualifying Scheme contributions, such as the DEWS plan; and the ADGM option of a pension or savings scheme that the employee chooses in writing.
How is the UAE gratuity calculated?
On the last basic wage, for a full-time expatriate with at least one year of continuous service: 21 days' basic wage for each of the first 5 years, then 30 days' basic wage for each additional year. Part years after the first count pro rata, unpaid absence is excluded, and the total may not exceed two years' wage.
Because the formula uses basic wage, the split between basic salary and allowances in the contract directly sets the gratuity. An employee who leaves before completing one year receives no gratuity. The employer may deduct amounts the employee owes under the law or a judgment.
When must the gratuity be paid?
Within 14 days of the end of the contract. Article 53 requires the employer to pay all wages and other entitlements under the law, the contract or the establishment's by-laws within that period, and the gratuity is one of them.
Unpaid end-of-service benefits are a common subject of MoHRE labour complaints, which MoHRE first tries to settle amicably before any referral to court.
How does gratuity work for part-time and temporary staff?
For part-time and other work patterns, the gratuity is pro-rated: contracted annual hours divided by full-time annual hours, multiplied by 100, gives the percentage of the full-time gratuity that is due. Temporary work that lasts less than one year earns no gratuity.
This formula is set by Article 30 of Cabinet Resolution No. 1 of 2022, the Executive Regulations of the Labour Law.
What is the MoHRE Savings Scheme?
A voluntary alternative to the gratuity, set up by Cabinet Resolution No. 96 of 2023 and open to employers in the private sector and free zones. A participating employer pays monthly into an investment fund approved by the Securities and Commodities Authority: 5.83% of monthly basic salary for employees with under 5 years' service and 8.33% after 5 years, within 15 days of the start of each month.
The employer can enrol all employees or chosen groups, stops applying the traditional gratuity for them, and must settle any gratuity already accrued before enrolment. Employees can add voluntary contributions of up to 25% of total wage and receive their balance and returns within 14 days of leaving.
How is end-of-service handled in the DIFC and ADGM?
The DIFC requires an employer to pay monthly into a Qualifying Scheme, such as the DEWS plan, at 5.83% of monthly basic wage for the first 5 years of service and 8.33% after that, with a gratuity owed only for service before 1 February 2020. The ADGM pays a gratuity of 21 days' basic wage a year for the first 5 years and 30 days after, with no two-year cap in its Regulations.
In both zones basic wage for these purposes may not be less than 50% of total wage. In the ADGM, an employer may instead offer, in writing, a pension or savings scheme; an employee who chooses it in writing gives up the gratuity unless the employer agrees otherwise.
Do Emiratis and GCC nationals get a gratuity?
No. UAE nationals in the private sector receive end-of-service benefits under the pensions and social security legislation, and the employer must register them and start contributing within a month of the work permit being issued. GCC nationals are covered through the GCC social insurance extension system, with the employer contributing under their home country's rules.
In the DIFC and ADGM, UAE and GCC nationals are registered in the federal pension scheme and are not eligible for the gratuity. In the ADGM, the exception is an employee who has the pension authority's written approval not to take part and gives it to the employer within 30 days (section 60). A DIFC employer also pays a top-up into a Qualifying Scheme where the GPSSA contribution falls short of the expatriate rate, once the top-up reaches AED 1,000 a month.
Key figures
| Detail | Value |
|---|---|
| Gratuity formula, Article 51 | A full-time foreign worker who completes a year or more of continuous service is owed end-of-service benefits calculated on the basic wage: 21 days' wage for each of the first 5 years of service, and 30 days' wage for each year beyond that. Part years count pro rata once one year is complete. Unpaid absence is excluded from service. The total may not exceed two years' wage. (source) |
| Basic wage only | The gratuity is calculated on the last wage the worker was entitled to, namely the basic salary, and does not include allowances such as housing, transportation, utilities or furniture. The employer may deduct amounts owed by the worker. (source) |
| Payment deadline, Article 53 | Employers must pay all outstanding wages, other entitlements and gratuity within 14 days of the termination of the contract. (source) |
| Part-time and temporary work | Under Article 30 of Cabinet Resolution No. 1 of 2022, contracted annual hours divided by full-time annual hours, multiplied by 100, gives the percentage of the full-time gratuity due. No gratuity for temporary employment lasting less than one year. (source) |
| Savings Scheme, Cabinet Resolution No. 96 of 2023 | Voluntary alternative for employers and employees in the private sector and free zones. Employer contributions for full-time employees: 5.83% of monthly basic salary if the employee has not completed 5 years of service, 8.33% if the employee has served more than 5 years, paid into an SCA-approved investment fund within 15 days of the start of each month. Employee voluntary contributions up to 25% of total wage. Accrued gratuity before enrolment must be settled. Balance paid within 14 days of termination. (source) |
| UAE and GCC nationals | End-of-service benefits for Emiratis in the private sector follow the pensions and social security legislation; the employer must register the Emirati and start contributing within a month of the work permit being issued. GCC nationals are covered by the social insurance extension system, with employers contributing under their home country's regulations. (source) |
| DIFC Qualifying Scheme contributions, Article 66(7) | From the Qualifying Scheme Commencement Date (1 February 2020 for employees already employed then), the employer pays monthly to a Qualifying Scheme for each employee who is not an Exempted Employee: 5.83% of Monthly Basic Wage for the first 5 years of service, and 8.33% for each additional year. Monthly Basic Wage may not be calculated at less than 50% of Monthly Wage. (source) |
| DIFC gratuity for earlier service, Article 66(1) to (3) | An employee not registered with the GPSSA with at least one year of continuous employment is owed a gratuity for service before the Qualifying Scheme Commencement Date: 21 days' Basic Wage for each of the first 5 years and 30 days' Basic Wage for each additional year, capped at two times Annual Wage. Basic Wage may not be less than 50% of Annual Wage. (source) |
| DIFC UAE and GCC nationals, Article 65 | UAE and GCC nationals must be registered with the GPSSA and are not eligible for a Gratuity Payment. Where the employer's GPSSA contribution is less than the Core Benefits a non-national would receive, the employee is entitled to a top-up of the difference into a Qualifying Scheme, provided the monthly top-up is AED 1,000 or more. (source) |
| DIFC DEWS plan | The DIFC Employee Workplace Savings (DEWS) plan is listed by the DIFC as a Qualifying Scheme for end-of-service benefits, alongside other approved schemes. (source) |
| ADGM end of service gratuity, section 61 | An employee with one year or more of continuous employment is entitled to a gratuity on termination regardless of the reason: 21 days' Basic Wage for each of the first 5 years and 30 days' Basic Wage for each additional year, on the Basic Wage at the Termination Date, which may not be less than 50% of Wages. Part years are pro rata. The section states no overall cap. As an alternative, the employer may offer a pension or savings scheme in writing; an employee who chooses it in writing is not entitled to the gratuity unless the employer agrees otherwise. (source) |
| ADGM UAE and GCC nationals, section 60 | The employer must enrol a UAE or GCC national in the relevant UAE federal pension scheme within 30 calendar days of the start of employment and pay contributions. They are not eligible for the gratuity unless the pension authority has approved in writing their non-participation. (source) |
Frequently asked questions
Is the UAE gratuity based on total salary or basic salary?
Basic salary. Under Article 51 the gratuity is calculated on the last basic wage and excludes allowances such as housing and transport. In the DIFC and ADGM, basic wage for this purpose cannot be set below 50% of total wage.
Does an employee who resigns still get a gratuity?
Yes, if they have completed at least one year of continuous service. The current Labour Law does not reduce the gratuity for resignation, and the ADGM Regulations pay it regardless of the reason for termination.
Is the gratuity capped?
Under the federal Labour Law, the total may not exceed two years' wage, and the DIFC caps pre-2020 gratuity at two times annual wage. The ADGM Regulations state no cap.
Can I pay into a fund instead of paying a lump sum gratuity?
Yes. On the mainland and in free zones, an employer can join MoHRE's voluntary Savings Scheme and contribute 5.83% or 8.33% of monthly basic salary to an approved fund. In the DIFC, monthly Qualifying Scheme contributions at those rates are mandatory.
Each of the six Gulf states writes its own labour law, its own end-of-service rules and its own quota for hiring citizens. When Teamed is your legal employer, we apply the right rules for the country each person works in and update your contracts, policies and payroll as the law changes, so you never have to read a statute to stay compliant.
