End-of-service gratuity is a lump sum your employer pays when your job ends. In the UAE, private-sector gratuity is 21 days’ basic salary for each of your first five years and 30 days’ basic salary for each year after that, capped at two years’ pay, and you need at least one year of service. In Saudi Arabia, the end-of-service award is half a month’s wage for each of the first five years and a full month’s wage for each year after that, based on your actual wage including allowances. The biggest difference is resignation: the UAE no longer reduces gratuity when you resign, but Saudi Arabia does.
This guide explains both formulas, with worked examples you can use as a gratuity calculator. It is general information, not legal advice. Free zones, government jobs and some contracts follow other rules, and laws change, so check the official sources before you rely on a number.
UAE and Saudi end of service benefits at a glance
| UAE (private sector, expatriates) | Saudi Arabia (private sector) | |
|---|---|---|
| Law | Federal Decree-Law No. 33 of 2021, Articles 51 to 53 | Labour Law, Articles 84 to 88 |
| Minimum service | 1 year | None if the employer ends the contract; 2 years if you resign |
| First 5 years | 21 days’ pay per year | Half a month’s pay per year |
| After 5 years | 30 days’ pay per year | One month’s pay per year |
| Pay used | Last basic salary | Last actual wage, including allowances |
| Cap | 2 years’ pay | No cap in the formula |
| If you resign | No reduction | Nothing under 2 years, 1/3 for 2 to 5 years, 2/3 for 5 to 10 years, full after 10 |
| Payment deadline | 14 days after the contract ends | 1 week if the employer ends it, 2 weeks if you do |
Sources: u.ae and the Saudi Labour Law, Part Five.
UAE gratuity calculation
The rules
The official UAE government portal sets out the rules from Federal Decree-Law No. 33 of 2021 (u.ae):
- Eligibility: full-time workers with “one year or more in continuous service”. Under one year, no gratuity. Days of unpaid absence don’t count as service.
- Years 1 to 5: 21 days’ salary for each year.
- After year 5: 30 days’ salary for each further year.
- Part years: once you have completed a full year, part years count in proportion to the time worked.
- Basis: your last wage, “namely the basic salary”. Housing, transport, utilities and other allowances are left out.
- Cap: the total can’t be more than two years’ wages.
- Deductions: the employer may deduct amounts you owe them.
- Timing: gratuity, outstanding wages and other dues must be paid within 14 days of the contract ending.
The UAE gratuity formula
There are two steps:
- Work out your daily basic wage. A common method is monthly basic salary ÷ 30. Some employers use annual basic ÷ 365, which gives a slightly lower figure. Ask yours which they use.
- Multiply: (daily basic × 21 × years up to 5) + (daily basic × 30 × years after 5), and stop at 24 months of basic salary.
Worked examples (UAE)
Monthly basic salary AED 15,000, so a daily basic of AED 500 using the ÷ 30 method.
| Service | Calculation | Gratuity |
|---|---|---|
| 11 months | Under one year | AED 0 |
| 1 year | 21 × 500 × 1 | AED 10,500 |
| 3 years 6 months | 21 × 500 × 3.5 | AED 36,750 |
| 7 years | (21 × 500 × 5) + (30 × 500 × 2) | AED 82,500 |
| 20 years | (21 × 500 × 5) + (30 × 500 × 15) | AED 277,500 (below the cap of 24 × 15,000 = AED 360,000) |
Notice what is missing: your housing and transport allowances. If your package is AED 30,000 a month but only AED 15,000 is basic, your gratuity is calculated on AED 15,000. That is why the basic salary in your offer matters. Our guide on how to read a Gulf job offer explains how packages are split.
Gratuity calculation on resignation in the UAE
Under the current law, resigning does not reduce your gratuity. The u.ae summary of Decree-Law No. 33 of 2021 sets one formula for full-time workers with at least a year’s service and mentions no cut for resignation (u.ae).
Many older articles and online calculators still apply reductions of one third or two thirds for resigning. Those came from the previous labour law, Federal Law No. 8 of 1980. The 2021 decree-law, in force since February 2022, replaced it and dropped the reduction, as payroll guides note (Zoho Payroll). If a calculator cuts your gratuity because you resigned, it is using the old rules.
You still need to work your notice period as your contract and the law require.
Part-time, temporary and Emirati employees
- Part-time: gratuity is a share of the full-time amount, in proportion to your contract hours, under Cabinet Resolution No. 1 of 2022.
- Temporary work under one year: no gratuity.
- UAE nationals: covered by the pensions and social security system instead.
All three are from u.ae.
The UAE Savings Scheme
Under Cabinet Resolution No. 96 of 2023, employers can choose a voluntary Savings Scheme instead of the traditional gratuity. The employer pays a monthly contribution into an approved investment fund: 5.83% of basic salary for staff with under five years’ service and 8.33% after five years. You can add your own contributions of up to 25% of your total wage, and you receive the money plus returns within 14 days of leaving. Once you are enrolled, the employer stops accruing traditional gratuity and must settle what you had earned before (u.ae).
Ask your employer which system applies to you.
Free zones
The u.ae page says the Savings Scheme applies in the private sector and the free zones, and that the financial free zone authorities supervise their own employers (u.ae). The financial free zones in Dubai (DIFC) and Abu Dhabi (ADGM) have their own employment laws and end-of-service schemes. If your employer is in one of them, read your contract and the free zone’s rules rather than the federal formula. For other free zones, such as DMCC, check your contract and ask HR which rules they apply.
End of service benefits in Saudi Arabia
The Saudi labour law rules
Article 84 of the Saudi Labour Law says that when employment ends, the employer pays “an end-of-service indemnity calculated on the basis of half a month’s wage for each year of the first five years of service, and one month’s wage for each subsequent year”. The last wage is the basis, and part years count pro rata (HRSD, Labour Law Part Five).
Which wage counts
This is the key difference from the UAE. The Saudi Labour Law defines “wage” as the actual wage: the basic wage plus allowances, commissions and other regular increments, including allowances for effort or risk, cost-of-living increases and benefits in kind. Housing or other benefits in kind are valued at up to two months’ basic salary a year unless the contract sets a higher value (HRSD, Labour Law Part One).
Article 86 lets you and your employer agree that commissions, sales percentages and similar variable pay are left out of the wage used for the award (HRSD). Check your contract for such a clause.
End of service benefits on resignation in Saudi Arabia
Article 85 cuts the award when you resign (HRSD):
| Continuous service when you resign | Share of the award |
|---|---|
| Under 2 years | Nothing |
| 2 to 5 years | One third |
| More than 5 and under 10 years | Two thirds |
| 10 years or more | Full award |
Article 87 makes the full award payable if you leave because of force majeure beyond your control, and for a female worker who ends her contract within six months of her marriage contract or within three months of giving birth.
Under Article 81, you can also leave without notice and keep all your statutory rights in some cases, for example if the employer fails to meet its essential obligations, deceived you about the terms when you signed, or gives you fundamentally different work without your consent (HRSD).
When the employer ends the contract
If your employer ends the contract, you get the full Article 84 award, with no minimum service. If the termination is for an illegitimate reason, Article 77 adds compensation: unless your contract says otherwise, 15 days’ wages per year of service on an open-ended contract, or the wages for the rest of the term on a fixed-term contract, and never less than two months’ wages (HRSD).
Article 80 lists the cases, such as assault, serious misconduct or dishonesty, where the employer may end the contract without an award, notice or compensation, after giving you a chance to object.
Payment deadline
Article 88 says the employer must settle your wages and entitlements within one week if it ends the contract, and within two weeks if you do. It may deduct work-related debts you owe it (HRSD).
Worked examples (Saudi Arabia)
Actual monthly wage SAR 20,000 (for example basic SAR 13,000, housing SAR 5,000, transport SAR 2,000).
| Situation | Full award (Article 84) | You receive |
|---|---|---|
| Employer ends contract after 1 year 6 months | 0.5 × 20,000 × 1.5 = SAR 15,000 | SAR 15,000 |
| You resign after 1 year 6 months | SAR 15,000 | SAR 0 |
| You resign after 3 years | 0.5 × 20,000 × 3 = SAR 30,000 | 1/3 = SAR 10,000 |
| You resign after 7 years | (0.5 × 20,000 × 5) + (20,000 × 2) = SAR 90,000 | 2/3 = SAR 60,000 |
| You resign after 10 years | (0.5 × 20,000 × 5) + (20,000 × 5) = SAR 150,000 | SAR 150,000 |
UAE vs Saudi: what this means for your offer
- In the UAE, push for a higher basic salary. Gratuity ignores allowances, so two packages with the same total can produce very different gratuity.
- In Saudi Arabia, the split matters less for the award, because allowances count. But resigning early costs a lot: under two years you get nothing.
- Plan your exit date. In Saudi Arabia, resigning just after five or ten years of continuous service moves you into a better band. In the UAE, the rate rises after five years.
- Get it in writing. Ask HR how they calculate the daily wage, whether you are on the UAE Savings Scheme, and whether a commission clause applies in Saudi Arabia.
Gratuity is not taxed in either country, but your home country may treat it differently. See our tax basics guide and work out your monthly take-home pay with the salary after tax calculator.
If you are deciding between the two countries, our comparison of Dubai vs Abu Dhabi vs Riyadh looks at pay and living costs, and tech jobs in Saudi Arabia shows who is hiring in Riyadh.
If your employer doesn’t pay
- UAE: file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE) through its app, website or call centre. Free zone employees go to their free zone authority.
- Saudi Arabia: use the labour dispute services of the Ministry of Human Resources and Social Development, for example through Qiwa or the HRSD website.
Keep copies of your contract, payslips and resignation or termination letter.
Frequently asked questions
How is gratuity calculated in the UAE?
On your last basic salary. After at least one year of continuous service, you get 21 days’ basic pay for each of the first five years and 30 days’ basic pay for each year after that, with part years counted pro rata. The total can’t exceed two years’ wages, and it must be paid within 14 days of the contract ending.
Is gratuity payable on resignation in the UAE?
Yes, in full, if you have at least one year of continuous service. Federal Decree-Law No. 33 of 2021 dropped the reductions for resigning that applied under the old 1980 law. Calculators that still cut gratuity by a third or two thirds on resignation use outdated rules.
How much gratuity do I get after one year in the UAE?
21 days of basic salary. On a monthly basic of AED 15,000, using basic ÷ 30 as the daily rate, that is AED 10,500. Under one year of continuous service, you get no gratuity at all.
How are end of service benefits calculated in Saudi Arabia?
Half a month’s wage for each of the first five years and one month’s wage for each later year, with part years pro rata. The wage is your last actual wage, which includes allowances such as housing and transport, not just the basic salary.
What do I get if I resign in Saudi Arabia?
Nothing with under two years of continuous service, one third of the award with two to five years, two thirds with more than five and under ten years, and the full award after ten years. Force majeure and some cases for female workers after marriage or childbirth give the full award.
Do allowances count towards gratuity?
In the UAE, no: gratuity uses basic salary only. In Saudi Arabia, yes: the award uses the actual wage, which includes allowances, though a contract may exclude commissions and similar variable pay.