How the gratuity is worked out
This is the method, not the answer. Four operations in a fixed order, each one shown with real numbers, so you can do the whole thing on paper and get the same figure the calculator gives you — and so you can point at the step you disagree with instead of at the total.
The whole thing, in one line
Take your last basic monthly salary. Divide it by 30 to get a day’s pay. Count how many days of pay your service earned — 21 for each of the first 5 years, 30 for each year after that. Multiply. Then check the answer against the ceiling.
Everything below is that sentence, slowed down. If you only read one part, read the second step: it is where nearly every disagreement between an employee and an employer actually lives.
Step 1 — your daily wage
The whole calculation is denominated in DAYS of pay, so the first thing that has to happen is a monthly salary becoming a daily one. Your last basic monthly wage is divided by 30.
Two things about this step. First, it runs on your BASIC wage, not your total package — which is the single most expensive thing to get wrong, and the reason two colleagues on identical total pay can walk away with very different amounts. Second, it is your LAST basic wage rather than an average, so a raise or a cut shortly before you leave re-prices your entire service, not just the part after it.
Source: The UAE Government portal u.ae, on the end-of-service provision of Federal Decree-Law No. 33 of 2021: the gratuity “is calculated on basis of last wage which the worker was entitled to, namely the basic salary”, and does not include housing, transport, utilities or furniture allowances.
The divisor of 30 is the one number on this page we could not find stated on an official government source. It is what every UAE calculator uses and it is universally applied — but it multiplies your entire result, so the calculator says so on every answer it produces rather than burying it here. How this site handles a figure like that.
Step 2 — the days your service earned
Service is priced in bands, and the rate steps up once. This is the table to argue with:
| Years of service | Days of wage per year | What it means |
|---|---|---|
| Under 1 | — | No entitlement arises at all. Not a reduced amount: nothing. |
| 1 to 5 | 21 | Every year counts, including the first. The qualifying period is a gate you pass, not a year you lose. |
| Each year after 5 | 30 | The higher rate applies to the later years only. Reaching year 6 does not re-rate the first 5 upward. |
That last row is the one that catches people, in both directions. The wording is 30 days “for each year of work following the first 5 years” — so a long career is priced as two stacked bands, not as one high rate applied to everything. Anyone who has worked with marginal tax bands will find this familiar; anyone who has not usually assumes the opposite.
Step 3 — the part-year
Once the qualifying period is behind you, a fraction of a year earns the matching fraction of its band’s rate. Six months in the lower band earns half of 21 days. The part-year is priced at the rate of whichever band it falls in, not at the opening rate.
Source: u.ae: workers are entitled to gratuity for fractions of a year, proportionate to the time served, provided they have completed one year of continuous service.
What the official guidance does not say is the GRANULARITY — whether a part-year is counted to the day, the month, or something else. This calculator pro-rates by whole months and tells you so. The difference is small, but small is not nothing on a long service period, and a site that quietly picked a convention would be presenting a choice as a fact.
Step 4 — the ceiling
The total cannot exceed 24 months’ wage. It is expressed as a multiple of your wage rather than as a fixed dirham amount, so it scales with your salary instead of eroding — which in practice means it binds only at long tenure, and when it does it stops the total dead.
The order matters here more than it looks. The ceiling is the LAST operation on a full-time entitlement, which is why a part-time calculation applies its hours share to the capped figure rather than to the raw band total — the part-time page works that through.
What can still change the answer
- Unpaid leave. Days of unpaid absence do not count toward the period of service. Why almost no calculator asks.
- Your work model. A part-time contract earns a share set by hours; temporary work under a year earns nothing. The work-model rules.
- Whether this law covers you at all. Several groups are outside it entirely. Who qualifies, and who is under another system.
- What you owe your employer. Amounts owed may be deducted from what is paid. What else is in a final settlement.
And one thing that does not: why the job ended. Resigning has not reduced a UAE gratuity since February 2022, whatever the calculator you used last told you.
Do it yourself, then check
Work your own figure with the four steps above, then put the same inputs into the calculator. It prints every step it performed, with the arithmetic as performed, so a disagreement becomes “step 3 differs” rather than “the total is wrong”. If you would rather read the arithmetic than do it, ten worked examples cover the cases that come up most.