End of service UAE includes gratuity payments and final settlements, ensuring employees receive their rightful compensation.
This article will cover end-of-service benefits, calculating gratuity, UAE gratuity rules, final settlement calculations, and legal services related to end-of-service disputes in 2025.
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Table of Contents
End of Service UAE
End-of-service benefits refer to the financial compensation employees receive upon contract termination, either due to resignation or dismissal.
These benefits include gratuity, unpaid salaries, bonuses, or allowances.
Who is entitled to gratuity?
In the private sector, expatriate workers receive gratuity per the UAE Labour Law, while UAE nationals are covered under the UAE pension and social security system.
Employees under full-time, part-time, and flexible work contracts are entitled to gratuity based on their working hours.
How to Calculate Gratuity in UAE?
Gratuity is calculated based on the employee’s basic salary and years of service. The employer must pay gratuity within 14 days of contract termination.
Gratuity pay is calculated as follows:
- Less than 1 year: No gratuity entitlement.
- 1 to 5 years: 21 days’ basic salary per year of service.
- More than 5 years: 30 days’ basic salary per year after completing five years.
Important Notes:
- Gratuity is based on basic salary (excluding allowances like housing and transportation).
- The maximum gratuity cannot exceed two years’ salary.
- Unpaid leave days are not counted in the calculation.
For example, if an employee has worked for 6 years with a basic salary of AED 10,000, the gratuity is calculated as follows:
- First 5 years: (10,000 ÷ 30) × 21 × 5 = AED 35,000
- Sixth year: (10,000 ÷ 30) × 30 × 1 = AED 10,000
- The total gratuity would be AED 45,000.
UAE Gratuity Rules
The UAE Labour Law provides clear regulations for end-of-service benefits:
- Gratuity is mandatory for employees with at least one year of continuous service.
- It is calculated based on the last drawn basic salary (excluding allowances).
- Gratuity must be paid within 14 days after the termination date.
- Employers can deduct outstanding dues (such as loans) from gratuity.
- Alternative Savings Scheme: Employers can opt for the Savings Scheme, an investment-based alternative to traditional gratuity.
- Part-time and flexible contracts: Gratuity is calculated based on the working hours ratio compared to full-time work.
Read about UAE Labour Law Resignation Gratuity Dubai, and learn about Retirement Age UAE Labour Law.
Final Settlement UAE Calculation
The final settlement includes all pending dues owed to an employee when they leave the company. This covers:
- Unpaid salary
- Gratuity payment
- Unused leave balance
- Unpaid bonuses or incentives
- Any pending reimbursements
The employer must pay all dues within 14 days from the contract’s expiration.
The employer can deduct the amount from the final settlement if the employee owes the company money, such as a salary advance or loan.
Learn about asking the employer for a settlement agreement in UAE.
Legal Services Related to End of Service in UAE
Our specialized legal team offers comprehensive services related to end-of-service disputes, ensuring that employees receive their lawful entitlements and that employers comply with UAE Labour Law.
Our Legal Services Include:
- Gratuity Calculation Assistance – Helping employees and employers accurately calculate gratuity based on UAE law.
- Legal Advice on Labour Rights – Guiding end-of-service entitlements and compliance with employment contracts.
- Labour Dispute Resolution – Representing employees or employers in MoHRE complaints and labor court cases.
- Contract Review & Negotiation – Review employment contracts to clarify end-of-service benefits.
- Employer Compliance Services – Assisting companies in adhering to gratuity and end-of-service regulations.
FAQs About Gratuity in UAE
Conclusion
Understanding the end of service UAE is essential for both employees and employers.
Gratuity calculations depend on years of service and basic salary, and employers must settle all dues within 14 days.
Whether you need assistance with gratuity calculations, legal disputes, or contract compliance, our law firm provides expert legal services to protect your rights under UAE Labour Law.
Contact our labor law firm in UAE for expert help. Click the Whatsapp icon below.
A legal consultant specializing in UAE labor law. He regularly publishes articles on the website and writes on various areas of UAE law, with a specific focus on labor law.
