What counts as “basic salary”
This is the single most common mistake people make about their gratuity, and it is expensive. The entitlement is calculated on your BASIC wage — not on your total package. Two people on identical total pay can walk away with very different amounts because of how their contracts split it.
The rule, in one sentence
Your end-of-service gratuity is calculated on the last basic wage you were entitled to. Allowances are excluded — the law names housing, transport, utilities and furniture among them. Your total package is not the input; the basic component of it is.
Source: The UAE Government portal u.ae, on the basis of the end-of-service gratuity under Federal Decree-Law No. 33 of 2021: “calculated on basis of last wage which the worker was entitled to, namely the basic salary. Hence, it will not include allowances such as housing, transportation, utilities, furniture etc.”
| Component | Counts toward the gratuity? |
|---|---|
| basic wage | Yes — this is the figure the whole calculation runs on. |
| housing allowance | No — named in the guidance as an excluded allowance. |
| transport allowance | No — named in the guidance as an excluded allowance. |
| utilities allowance | No — named in the guidance as an excluded allowance. |
| furniture allowance | No — named in the guidance as an excluded allowance. |
The excluded list is not exhaustive in the source — it ends with “etc.” — so treat it as the pattern rather than the whole set. The test is whether a component is part of your basic wage or an allowance paid on top of it, not whether it appears in that sentence.
Why this is the expensive mistake
Take two people with the same total monthly package and the same length of service. One has a contract that puts most of the package into basic pay. The other has a contract that puts a large share into a housing allowance and a transport allowance.
They are paid the same every month. When they leave, they are owed materially different amounts — because only the basic component reached the calculation. Nothing about that is unlawful, and neither of them is being cheated; it is simply how the statute defines the basis. But it means the number on your offer letter that actually compounds into your end-of-service payout is the basic figure, not the headline total, and almost nobody negotiates it that way.
Where to find your basic salary
Your employment contract states it. So does the breakdown on your payslip, and so does the contract lodged with MOHRE — which is the version that governs if your copy and the lodged copy disagree. Look for the line the contract itself calls basic salary or basic wage; every other line on the breakdown is, for this purpose, an allowance.
If your contract states a single total figure with no split, that is worth resolving before you need the answer rather than after. A contract with no stated basic component is a contract with no stated gratuity basis.
The 60% rule that is not a rule
You will read, often, that basic salary “must be at least 60% of gross” in the UAE. It is worth being precise about this, because it is repeated as though it were statute.
There is no codified minimum basic-to-total ratio in the UAE labour law. The figure that circulates is market practice and an expectation courts and authorities have been known to apply when assessing whether a split was structured to suppress an entitlement — which is a meaningfully different thing from a legal minimum. A contract with a low basic component is not automatically invalid. It is, potentially, challengeable.
This site does not present that ratio as a rule, and it does not use it to reconstruct a basic salary from a total you enter. The calculator asks for your basic wage directly, because inventing one from a practice figure would put an unsourced assumption at the bottom of every number it produces.
Source: No provision of Federal Decree-Law No. 33 of 2021 known to this site fixes a minimum ratio between basic wage and total remuneration. The commonly-cited share is practice, not law.
What about commission, bonuses and overtime?
The statute frames the basis as the basic wage, in contrast to allowances. Variable pay — commission, discretionary bonus, overtime — is not basic wage, and does not enter the calculation on that footing. If a substantial and regular part of your earnings is variable, and your contract is ambiguous about its character, that is a question for advice on your specific contract rather than for a calculator.
What this changes about your number
Practically: when you use the calculator on this site, enter the basic figure from your contract, not the total you receive. If you enter the total, the result will be too high — in some contracts substantially so — and it will be too high in a way that looks entirely plausible.
Then read how unpaid leave affects the service period and what your last day actually is, which are the other two inputs people most often get wrong.