End-of-Service Benefits: How They're Calculated

What counts as end-of-service benefits

For most private-sector employees on the UAE mainland, "end-of-service benefits" mainly means gratuity, a lump sum based on your length of service and basic salary. It sits alongside, and separately from, any unpaid salary, accrued but unused annual leave, and any notice-period pay you're owed when your employment ends.

The general gratuity formula

The broad principle used under UAE labour law is that gratuity is calculated on your basic salary: not your total package including allowances, for each full year worked, once you've completed at least one year of continuous service. Roughly speaking, earlier years of service accrue at a lower daily rate than later years, and the total is generally capped at around two years' salary. The exact rate, thresholds and any adjustments can depend on your specific contract type and the applicable rules at the time you leave, so treat any percentage or day-count you see online as a general estimate rather than your exact entitlement.

This is a general guide, not a calculation of your specific entitlement. Verify the current formula and any recent changes with MOHRE or a licensed lawyer before relying on a number.

What can change the amount

• Whether you worked less than one year, typically no gratuity applies in that case.
• Whether the calculation uses basic salary only, or is disputed to include allowances.
• Unpaid leave periods, which are usually excluded from the qualifying service period.
• Any deductions your employer claims against the gratuity, which should be justified and documented.

What else you may be owed

Alongside gratuity, check for: any unpaid salary up to your last working day, payment for unused annual leave days you've accrued, and repatriation costs if that applies under your contract. All of these should appear on your final settlement, and it's worth asking your employer for an itemised breakdown rather than a single lump figure.

If your employer disputes the figure

If you and your employer can't agree on the final settlement amount, the first formal step is a MOHRE labour complaint. MOHRE will attempt conciliation between both sides, and if that doesn't resolve it, unsettled disputes over AED 50,000 are referred to the Labour Court. Having your contract, payslips and a clear timeline ready makes this process significantly smoother.

Key takeaways: gratuity is based on basic salary and length of service, roughly capped at two years' pay; check unpaid leave and salary too; verify the exact current formula with MOHRE or a lawyer; a labour complaint is the route if there's a dispute. See our MOHRE Filing service.

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