Gratuity for 2 Years in UAE: Exact Amount, Formula & Examples [2026]
UAE gratuity after 2 years = (Basic ÷ 30) × 21 × 2. Find your exact amount by salary, resignation vs. termination rules, partial-year calculation, and the 14-day payment rule.
Direct answer: After exactly 2 years of service in the UAE, your gratuity is:
Gratuity = (Basic Salary ÷ 30) × 21 × 2
At a basic salary of AED 5,000/month, that is (5,000 ÷ 30) × 21 × 2 = AED 7,000.
Two years falls within the first-five-years bracket, so you always use the 21 days per year rate. The 30-days-per-year rate only applies after your 5th year.
Your Gratuity by Salary: 2 Years of Service
| Monthly Basic Salary (AED) | Daily Wage (÷ 30) | 21 Days × 2 Years | Total Gratuity |
|---|---|---|---|
| AED 3,000 | AED 100 | 42 days | AED 4,200 |
| AED 5,000 | AED 166.67 | 42 days | AED 7,000 |
| AED 8,000 | AED 266.67 | 42 days | AED 11,200 |
| AED 10,000 | AED 333.33 | 42 days | AED 14,000 |
| AED 15,000 | AED 500 | 42 days | AED 21,000 |
| AED 20,000 | AED 666.67 | 42 days | AED 28,000 |
| AED 25,000 | AED 833.33 | 42 days | AED 35,000 |
Formula: (Basic ÷ 30) × 21 × 2. Based on Federal Decree-Law No. 33 of 2021.
Step-by-Step: How to Calculate UAE Gratuity for 2 Years
Step 1 — Find your basic salary. Use only the fixed basic salary stated in your employment contract. Do not include housing allowance, transport allowance, food allowance, commissions, or bonuses. If your contract says "Basic: AED 6,000 | Housing: AED 2,000 | Transport: AED 1,000" your gratuity base is AED 6,000 only.
Step 2 — Calculate your daily wage. Divide your basic salary by 30 (calendar days): Daily wage = Basic Salary ÷ 30
Step 3 — Multiply by 42 days. For 2 years: 21 days × 2 years = 42 days total. Gratuity = Daily wage × 42
Step 4 — Confirm 2 full years were completed. UAE gratuity requires at least 1 year of continuous service. For 2 years, count your exact start and end dates. Days of unpaid leave are excluded (see below).
Resignation vs. Termination: Does It Affect 2-Year Gratuity?
Under the current UAE Labour Law (Federal Decree-Law No. 33 of 2021), resignation and termination are treated identically for gratuity purposes. There is no reduction or penalty for resigning after 2 years; you receive the full 21-days-per-year calculation regardless of whether you quit or are let go.
This is a significant change from the old unlimited contract rules, which used to reduce gratuity for employees who resigned before 5 years. Those old penalty rules no longer apply to new contracts.
Important: If you are still on an older unlimited contract that has not been converted to a fixed-term agreement, check with your HR department whether the old rules still technically apply to your specific contract. All new contracts issued after 2023 are standardised as fixed-term (limited) contracts where no resignation penalty exists. {{VERIFY: Transition timeline for existing unlimited contracts}}
Partial Year: What If You Worked 2 Years and 4 Months?
UAE gratuity is calculated on a pro-rata basis for incomplete final years — unlike India, which uses a strict 6-month rounding rule.
Formula for partial year:
Partial gratuity = (Basic ÷ 30) × 21 × (Days worked in partial year ÷ 365)
Example — 2 years and 4 months (730 + 120 = 850 days total):
Basic: AED 8,000/month
Full 2-year gratuity: (8,000÷30) × 21 × 2 = AED 11,200
Partial year (120 days): (8,000÷30) × 21 × (120÷365) = AED 1,841
Total gratuity: AED 11,200 + AED 1,841 = AED 13,041
The pro-rata rule works in your favour; every extra day of service beyond 2 full years adds to your payout.
The Unpaid Leave Trap
Days of unpaid leave are subtracted from your total service period before calculating gratuity. Paid leave: annual leave, sick leave, and maternity leave do not reduce your service count.
Example: You worked 2 years but took 45 days of unpaid leave.
Your effective service for gratuity = 730 days − 45 days = 685 days (1 year and ~320 days).
You still exceed 1 year, so you are eligible. But the calculation is based on 685 days, slightly reducing your payout compared to a clean 2-year tenure.
If unpaid leave pushes you below 365 days of effective service, no gratuity is payable.
When Is Gratuity Paid? The 14-Day Rule
Under Article 53 of Federal Decree-Law No. 33 of 2021, your employer must settle all final dues, including gratuity, within 14 days of your last working day.
If your employer delays payment:
- File a complaint with MOHRE via the app, the website (mohre.gov.ae), or by calling 800-60
- MOHRE will attempt to mediate; if unresolved within 2 weeks, the case is referred to the Labour Court
- The complaint process is free of charge for employees
When Can Gratuity Be Forfeited?
UAE gratuity can only be withheld or reduced in one specific situation: dismissal for gross misconduct under Article 44 of the Labour Law. This covers proven cases of assault, theft, fraud, revealing trade secrets, or abandonment (absent without notice for 7+ consecutive days).
Poor performance is not misconduct. If your employer terminates you for underperformance, you still receive your full 2-year gratuity.
Probationary period: If you are dismissed during a probationary period, you typically do not qualify for gratuity as you will not have completed one year of service.
Not Covered Here
This guide covers mainland UAE private sector employees on standard contracts. Different rules apply if you work in the DIFC (Dubai International Financial Centre), which uses the DEWS monthly savings scheme instead of the lump-sum formula, or in the ADGM (Abu Dhabi Global Market). UAE nationals who opted into the voluntary end-of-service scheme are also governed by different terms.
Frequently Asked Questions
How much gratuity do I get after 2 years in the UAE?
Your gratuity after 2 years = (Monthly Basic Salary ÷ 30) × 21 × 2. At AED 5,000 basic: AED 7,000. At AED 10,000 basic ; AED 14,000. At AED 15,000 basic: AED 21,000. Only your fixed basic salary is used; housing, transport, and other allowances are excluded.
Do I get full gratuity if I resign after 2 years in UAE?
Yes. Under the current UAE Labour Law (Federal Decree-Law No. 33 of 2021), resignation after 2 years entitles you to the same full gratuity as termination. The old rule that reduced gratuity for resignation before 5 years on unlimited contracts no longer applies to new fixed-term contracts.
Is the 2-year cap related to 2 years of service?
No, these are two different things. The "2-year cap" in UAE law means your total gratuity across all years of service cannot exceed 2 years' worth of your basic salary (24 × monthly basic). This cap only becomes relevant for very long-tenured employees; it does not affect employees with 2 years of service at all.
What if I worked 2 years but had some unpaid leave?
Days of unpaid leave are deducted from your total service period. If you worked 730 days (2 years) but took 60 days unpaid, your effective service for gratuity is 670 days. You still qualify (over 365 days), but your payout is calculated on 670 days rather than the full 730 days.
When must my employer pay my gratuity in the UAE?
Your employer must pay gratuity and all final dues within 14 days of your last working day under Article 53. If payment is delayed beyond 14 days, file a complaint with MOHRE via the app or by calling 800-60.