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Working in the UAE? Here's how your end-of-service gratuity is actually calculated

Tips · 2026-10-10 · 7 min read

If you are weighing up a move from the UAE to a sponsored role in Australia or New Zealand, your end-of-service gratuity is one figure worth getting right before you plan anything else. Under UAE Federal Decree Law No. 33 of 2021, a private-sector worker gets nothing for under a year of service, 21 days' basic salary for each year up to 5 years, and 30 days' basic salary for each year after that, capped at the wage of 2 years in total, and paid out within 14 days of your contract ending. Here is how each part of that actually works.

Gratuity by length of service

Why it is based on your basic salary only

UAE end-of-service gratuity is calculated on the last basic salary you were entitled to, and it does not include allowances such as housing or transport. If your pay package is split between a basic salary and separate allowances, as many UAE contracts are, your gratuity will usually be a smaller figure than your total monthly pay would suggest. It is worth checking your contract's basic salary line specifically, rather than your take-home pay, before you estimate what you are owed.

Turning the cap into Australian or New Zealand dollars

There is no single dirham figure for the 2-year cap, because it depends entirely on your own basic salary. What you can use is the Central Bank of the UAE's own published rate to convert whatever your basic salary works out to: on 7 October 2026 the Bank listed 1 Australian dollar at 2.553184 dirhams and 1 New Zealand dollar at 2.054431 dirhams. Take your basic monthly salary, multiply by the number of months your gratuity covers, then divide by one of those rates for a rough AUD or NZD figure. Exchange rates move daily, so treat any conversion as a guide for planning, not an exact amount, and check the Bank's page again closer to your move.

When you must be paid, and the alternative scheme

Your employer must pay all outstanding wages, other entitlements and gratuity within 14 days of your contract ending, so a long delay after you finish up is itself worth raising. Some employers instead use the UAE's alternative end-of-service savings scheme, where the employer contributes 5.83 per cent of your monthly basic salary each month if you have not yet completed 5 years of service, or 8.33 per cent after 5 years, into a savings arrangement rather than paying a lump sum at the end. If your employer uses this scheme, your payout works differently from the standard gratuity calculation above, so it is worth asking HR directly which system applies to you.

Before you resign: notice and visa cancellation

Gratuity is only one part of leaving a UAE job properly. The same final 14-day window that covers your gratuity also covers these steps:

1. Give written notice under Article 43 of the UAE Labour Law: not less than 30 days and not more than 90 days, whatever your contract specifies within that range.
2. Expect a notice period allowance to be owed to whichever side does not serve out the agreed notice.
3. Have your employer apply to MOHRE to cancel the labour contract and labour card, which you must also sign.
4. Sign the letter confirming you have received all wages and end-of-service benefits only once they have actually been paid, since the employer must submit this letter to MOHRE.
5. Have your employer apply to ICP for visa cancellation once the labour card is cancelled.

Once your residence permit is cancelled, ICP gives a standard 30-day grace period to leave or arrange a new visa, extended to 90 days for skilled workers in levels 1 to 3, and 180 days for Golden, Green and Blue Residence holders. Staying on after that grace period runs out costs a fine of AED 50 per day. It is worth lining up these dates on a simple timeline before you resign, so your notice period, your final 14-day payment window and your residence grace period do not all land on top of each other while you are also preparing a visa application for Australia or New Zealand.

Common mistakes workers make before they move

• Estimating gratuity from total monthly pay instead of the basic salary line in the contract.
• Expecting any gratuity at all for less than a full year of service.
• Assuming there is no upper limit, when the total is always capped at 2 years' wage however long you have worked.
• Not asking whether the employer uses the standard gratuity rule or the alternative savings scheme.
• Leaving the UAE before confirming the 14-day final payment window has been met.
• Resigning without serving the notice period required under Article 43, which can leave you owing a notice period allowance instead of receiving one.

Frequently asked questions

How much end-of-service gratuity do I get in the UAE?

Nothing for less than 1 year of service; 21 days' basic salary for each year worked between 1 and 5 years; and 30 days' basic salary for each year worked beyond 5 years, with the total capped at 2 years' wage.

Is gratuity calculated on my full salary or just my basic salary?

Only your basic salary counts; allowances such as housing or transport are not included in the calculation.

Is there a maximum gratuity amount?

Yes, the total end-of-service gratuity cannot exceed the wage of 2 years, no matter how long you have worked.

When should I be paid my final gratuity?

Your employer must pay all outstanding wages, other entitlements and gratuity within 14 days of your employment contract ending.

What is the alternative savings scheme?

Some employers pay into a savings arrangement instead of the standard gratuity, contributing 5.83 per cent of your monthly basic salary before 5 years of service, or 8.33 per cent after 5 years.

Roughly how much is the gratuity cap in Australian dollars?

Multiply your own basic salary cap in dirhams by the Central Bank of the UAE's published rate (2.553184 dirhams to 1 Australian dollar on 7 October 2026) for a rough AUD figure; the rate changes daily, so check the Bank's page again closer to your move.

Key takeaways

• No gratuity under 1 year; 21 days' basic salary per year up to 5 years; 30 days' basic salary per year after that.
• Gratuity is based on basic salary only, never on housing, transport or other allowances.
• The total is always capped at 2 years' wage, and must be paid within 14 days of your contract ending.
• Some employers use an alternative savings scheme instead, paying in 5.83 or 8.33 per cent of basic salary monthly.
• Convert the figure to AUD or NZD only as a rough guide, using the Central Bank of the UAE's published rate on the day.

If you are weighing roles such as an accounting and finance position in Australia, an administration role, or a specific opening like the Project Analyst role in Perth, knowing your gratuity figure in advance makes it much easier to plan the move with confidence.

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