How to calculate end of service in the UAE
These rules come from Federal Decree-Law No. 33 of 2021 and apply to the mainland private sector [1].
Who is eligible
A full-time foreign worker with one year or more of continuous service is entitled to gratuity; with less than one year, none is due [1][2]. UAE nationals follow the pensions and social security legislation instead [1]. Part-time gratuity is prorated by contracted annual hours against full-time hours [2].
The UAE gratuity formula
| Years of service | Gratuity per year |
|---|---|
| Years 1 to 5 | 21 days of basic wage |
| Each year after year 5 | 30 days of basic wage |
| Total, any length of service | Capped at two years’ wage |
Source: Article 51 [1]
Which wage, partial years and unpaid absence
- Wage: the last basic wage; housing, transport, utilities and similar allowances are excluded [1][2].
- Partial years: after one year of continuous service, part-years are paid in proportion to time worked [1].
- Unpaid absence: unpaid days of absence are not counted in the service period [1].
- Calendar: the law uses the Gregorian calendar, with a year of 365 days and a month of 30 days (Article 67) [1].
Resignation, dismissal and deductions
The Decree-Law does not reduce gratuity on resignation. Article 51 ties the entitlement to one year of continuous service, not to who ended the contract, and Article 39 lists termination as a disciplinary sanction “while preserving the worker’s right of end of service benefits” [1]. The employer may deduct amounts the worker owes under the law or a judgment [1].
Payment deadline
Wages and all entitlements, including gratuity, are due within 14 days of the contract’s end (Article 53) [1].
The alternative savings scheme
Cabinet Resolution No. 96 of 2023 created a voluntary alternative to gratuity for private-sector employers, including free zones; MOHRE began implementing it on 1 November 2023 [3][4].
- The employer applies to MOHRE and pays 5.83% of monthly basic wage for employees with up to five years of service, and 8.33% beyond five years [3].
- The employer stops applying the gratuity system to enrolled employees. Gratuity earned before enrollment is paid at termination, calculated on the basic wage at the time of joining [3].
- Contributions plus returns are generally paid within 14 days of the end of employment [3].
Free zones: DIFC and ADGM
The Decree-Law itself does not mention free zones [1]. Financial free zones set the savings-scheme rules for entities under their jurisdiction [3][4], and the DIFC operates its own DIFC Employee Workplace Savings (DEWS) Plan [5]. For staff in DIFC or ADGM, check that zone’s own employment rules before using this calculation.
How to calculate end of service in Saudi Arabia
These rules come from the Saudi Labor Law (Royal Decree No. M/51) [6].
The formula and the wage basis
When employment ends, the employer pays half a month’s wage for each of the first five years and one month’s wage for each later year, plus a proportional amount for part of a year (Article 84) [6][7].
The award uses the last wage [6]. The law defines wage as the actual wage: basic wage plus other increments due for effort, risk, or under the contract or work regulation, including allowances, commissions and in-kind benefits [6]. Article 86 lets the parties agree to exclude commissions and sales percentages from the award’s wage [6].
Resignation: the share of the award by length of service
| Consecutive service at resignation | Share of the award |
|---|---|
| Less than 2 years | None |
| 2 to 5 years | One-third |
| More than 5 and less than 10 years | Two-thirds |
| 10 years or more | Full award |
Source: Article 85 [6][7].
When the full award applies despite resignation
Article 87 overrides Article 85: the full award is due when the worker leaves because of force majeure, and when a female worker ends the contract within six months of her marriage or three months of giving birth [6]. Article 81 also lets a worker leave without notice, keeping all statutory rights, in the cases it lists [6].
When no award is due
Article 80 lists the cases in which the employer may terminate without award, notice or compensation, provided the worker can state objections [6]. Record the specific ground before excluding the award.
Payment deadline
Wages and entitlements are due within one week of the contract’s end, or two weeks when the worker ended it; work-related debts may be deducted (Article 88) [6].
Did the 2025 Labor Law amendments change end of service?
No. The amendments under Royal Decree No. M/44 took effect on 19 February 2025, revising 38 articles, removing seven and adding two [9]. HRSD’s summary of the amendments does not list Articles 84 to 88 [8]. New Article 79 bis treats a resignation as accepted if the employer does not reply within 30 days, allows the employer to defer acceptance by up to 60 days with written reasons, and lets the worker withdraw within seven days unless already accepted [8]. It changes the contract end date, and so the service length.
UAE vs Saudi Arabia end of service: side-by-side
| Item | UAE (mainland) | Saudi Arabia |
|---|---|---|
| Legal basis | Decree-Law 33 of 2021, Arts. 51–53 | Labor Law, Arts. 84–88 |
| Minimum service | 1 year continuous | None stated; 2 consecutive years on resignation |
| Years 1–5 | 21 days of basic wage per year | Half a month’s wage per year |
| After year 5 | 30 days of basic wage per year | One month’s wage per year |
| Wage used | Last basic wage, no allowances | Last actual wage, with allowances |
| Partial years | Pro rata after 1 year | Pro rata |
| Unpaid absence | Excluded from service | Not addressed in Arts. 84–88 |
| Cap | Two years’ wage | None in Arts. 84–88 |
| Resignation | No reduction | None, 1/3, 2/3 or full |
| Payment deadline | 14 days | 1 week; 2 weeks if employee ended it |
| Calendar | Gregorian, 365-day year, 30-day month | Hijri unless contract says otherwise |
Sources: UAE [1][2]; Saudi Arabia [6]
Worked examples
Conventions used. UAE: daily basic wage = monthly basic ÷ 30 and part-years = days ÷ 365, following Article 67 [1]. Saudi Arabia: the monthly last wage is used directly and part-years = days ÷ 365, assuming the contract adopts the Gregorian calendar as Article 10 permits [6].
UAE example 1: 3 years of service
- Monthly basic wage AED 9,000 (package AED 15,000; allowances ignored); daily basic wage 9,000 ÷ 30 = AED 300.
- Gratuity: 3 × 21 × 300 = AED 18,900, the same if the employee resigned.
UAE example 2: 8 years 176 days, with unpaid absence
- Countable service: 8 years 176 days minus 30 unpaid days = 8 years 146 days = 8.4 years (146 ÷ 365 = 0.4).
- Monthly basic wage AED 12,000; daily basic wage AED 400.
- Years 1–5: 5 × 21 × 400 = AED 42,000.
- Years 6–8: 3 × 30 × 400 = AED 36,000.
- Part-year: 0.4 × 30 × 400 = AED 4,800.
- Total: AED 82,800, well below the two-year cap.
Saudi example 1: 3 years, employer ends the contract or employee resigns
- Last wage: basic SAR 8,000 + housing SAR 2,000 + transport SAR 800 = SAR 10,800.
- Full award: 3 × 0.5 × 10,800 = SAR 16,200.
- If the employee resigned: service is between 2 and 5 years, so one-third applies: 16,200 ÷ 3 = SAR 5,400.
Saudi example 2: 8 years 73 days, contract ends or employee resigns
- Last actual wage (basic plus allowances) SAR 15,000; service 8 years 73 days = 8.2 years (73 ÷ 365 = 0.2).
- Years 1–5: 5 × 0.5 × 15,000 = SAR 37,500.
- Years 6–8: 3 × 15,000 = SAR 45,000.
- Part-year: 0.2 × 15,000 = SAR 3,000.
- Full award: SAR 85,500.
- If the employee resigned: more than 5 and under 10 years, so two-thirds: 85,500 × 2 ÷ 3 = SAR 57,000.
Data HR needs before calculating: checklist
Common end-of-service calculation errors
- Wrong wage. The UAE uses basic wage only; Saudi Arabia uses the actual wage with allowances [1][6].
- Saudi resignation fractions applied in the UAE. The UAE Decree-Law has no resignation reduction [1].
- Unpaid absence counted as UAE service [1].
- Part-year or final raise ignored. Both laws pay part-years and use the last wage [1][6].
- No cap check for long-serving UAE employees [1].
- Wrong Saudi resignation end date under Article 79 bis [8].
- Full service recalculated for savings-scheme members, whose earlier gratuity is fixed at the basic wage on joining [3].
Sources
- Federal Decree-Law No. (33) of 2021 Regarding the Regulation of Employment Relationships and its amendments — Ministry of Human Resources and Emiratisation, published on the UAE Government portal — https://u.ae/-/media/Mohre-2024/Federal-DecreeLaw-No-33-of-2021-Regarding-the-Regulation-of-Employment-Relationship-and-its-amendmen.pdf (accessed October 2026)
- End of service benefits for workers in the private sector — UAE Government portal (u.ae) — https://u.ae/en/information-and-services/jobs/Sector-of-employment/employment-in-the-private-sector/end-of-service-benefits-for-employees-in-the-private-sector (accessed October 2026)
- Cabinet Resolution No. (96) of 2023 Concerning the Alternative Voluntary End of Service Scheme — UAE Legislation (uaelegislation.gov.ae) — https://uaelegislation.gov.ae/en/legislations/2309/download (accessed October 2026)
- Voluntary Alternative End-of-Service Benefits Scheme goes into effect by Cabinet resolution — Ministry of Human Resources and Emiratisation — https://mohre.gov.ae/en/media-center/news/1/11/2023/voluntary-alternative-end-of-service-benefits-scheme-goes-into-effect-by-cabinet-resolution-aiming-t (accessed October 2026)
- Qualifying Schemes: DIFC Employee Workplace Savings (DEWS) Plan — Dubai International Financial Centre Authority — https://www.difc.com/business/Qualifying-Schemes (accessed October 2026)
- Labor Law (Royal Decree No. M/51 dated 23/8/1426H), Articles 2, 10, 80, 81, 84–88 — Bureau of Experts at the Council of Ministers — https://laws.boe.gov.sa/BoeLaws/Laws/LawDetails/08381293-6388-48e2-8ad2-a9a700f2aa94/1 (accessed October 2026)
- Rights upon the end of the employment contract (الحقوق عند انتهاء عقد العمل) — Ministry of Human Resources and Social Development — https://www.hrsd.gov.sa/media-center/media/lerightseocontract (accessed October 2026)
- Summary of the amendments to the Labor Law (ملخص التعديلات التي تمت على نظام العمل) — Ministry of Human Resources and Social Development — https://hrsd.gov.sa/sites/default/files/2024-08/%D9%85%D9%84%D8%AE%D8%B5%20%D8%A7%D9%84%D8%AA%D8%B9%D8%AF%D9%8A%D9%84%D8%A7%D8%AA%20%D8%A7%D9%84%D8%AA%D9%8A%20%D8%AA%D9%85%D8%AA%20%D8%B9%D9%84%D9%89%20%D9%86%D8%B8%D8%A7%D9%85%20%D8%A7%D9%84%D8%B9%D9%85%D9%84.pdf (accessed October 2026)
- Ministry of Human Resources and Social Development announces the entry into force of the Labor Law amendments — Ministry of Human Resources and Social Development — https://www.hrsd.gov.sa/en/media-center/news/وزارة-الموارد-البشرية-والتنمية-الاجتماعية-تعلن-عن-بدء-سريان-تعديلات-نظام-العمل (accessed October 2026)
This guide is general information based on official sources as of October 2026. Confirm your specific situation with the authority or a qualified adviser.