End Of Service Benefits In The UAE: What Employers And Employees Should Know

End of Service Gratuity is one of the most important statutory rights under UAE Labour Law, yet it is often misunderstood in practice.

Under Federal Decree-Law No. 33 of 2021, together with its Executive Regulations and MOHRE resolutions, the employment relationship is built on mutual contractual obligations:

• The employee provides agreed services
• The employer pays agreed remuneration
• Both must comply with UAE Labour Law at all times

One of the key protections for employees at the end of this relationship is End of Service Gratuity.

What is End of Service Gratuity?

End of Service Gratuity is a financial entitlement calculated on the employee's basic salary and becomes payable when the employment relationship ends, whether through resignation or termination. Its purpose is to provide financial support after completion of service.

Who is entitled?

• UAE Nationals: Gratuity is governed by pension and social security legislation applicable to nationals.
• Non-UAE Nationals: Entitlement arises after at least one year of continuous service.

How is it calculated for full-time employees?

For non-UAE nationals:

• 21 days' basic salary per year for the first 5 years of service
• 30 days' basic salary per year for service beyond 5 years

Certain unpaid absences are excluded from the calculation, and the law applies a clear cap:

• Maximum gratuity cannot exceed two years' total salary, regardless of length of service.

Can deductions be made?

Yes, but only in limited circumstances. Employers may deduct from gratuity only if:

• There is a final court judgment in the employer's favour, or
• The amounts are legally due (such as approved employee loans)

Any deductions must strictly follow the procedures set out in the Executive Regulations and are overseen by MOHRE.

What about part-time or flexible work arrangements?

For non-full-time employment models (part-time, job sharing, etc.), the law delegates the calculation method to the Executive Regulations, with the aim of maintaining labour market competitiveness while balancing employer and employee interests.

When must gratuity be paid?

All end-of-service entitlements, including gratuity, must be paid within 14 days from the termination date.

Why this matters

The UAE Labour Law reflects a clear policy objective:

to protect employees' rights while ensuring certainty, fairness, and competitiveness for employers.

For businesses, understanding gratuity obligations is essential for compliance and risk management.

For employees, knowing your entitlements ensures informed decision-making at the end of service.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.