How Gratuity Works for Dubai Employees
Dubai employees working in the mainland (outside free zones) are entitled to end-of-service gratuity under UAE Federal Labour Law. Gratuity is calculated based solely on your basic salary — housing, transport, performance bonuses, and other allowances are excluded.
First 5 Years of Service
21 Days' Basic Pay / Year
Formula: (Basic Salary ÷ 30) × 21 × Years
Beyond 5 Years
30 Days' Basic Pay / Year
Applied only to the years beyond the first 5.
Dubai Gratuity — Worked Example
Sarah works as a marketing manager at a Dubai-based company. Basic salary: AED 12,000/month. Service: 7 years.
| Component | Calculation | Amount |
|---|---|---|
| Daily wage | 12,000 ÷ 30 | AED 400 |
| First 5 years (T1) | 400 × 21 × 5 | AED 42,000 |
| Next 2 years (T2) | 400 × 30 × 2 | AED 24,000 |
| Total Gratuity | AED 66,000 |
Dubai vs DIFC — Key Difference
DIFC Free Zone Exception
If your employer's registered address is in the Dubai International Financial Centre (DIFC), you are likely enrolled in the DEWS (Workplace Savings) scheme instead of receiving a lump-sum gratuity. Under DEWS, your employer contributes a monthly percentage to an investment fund on your behalf. Check with your HR department to confirm which scheme applies to you.Eligibility & Key Rules
- Minimum service: 1 complete year with the same employer.
- Calculation base: Basic salary only — no allowances or bonuses included.
- Maximum cap: Total gratuity cannot exceed 2 years of basic salary.
- Payment deadline: 14 days after the last working day (Article 53).
- Contract type (from Feb 2022): All new contracts are limited (fixed-term). Resignation and termination now treated identically for gratuity purposes.