End of Service Calculator UAE

End of Service Calculator UAE: A Guide to Calculating Gratuity Benefits

The End of Service Calculator UAE is a valuable online tool designed to help employees and employers in the United Arab Emirates estimate gratuity payments, also known as end-of-service benefits, as mandated by UAE Labour Law. This lump-sum payment is awarded to employees upon leaving their job after a minimum period of service, serving as a token of appreciation for their contributions. With the complexities of gratuity calculations under Federal Decree-Law No. 33 of 2021, the calculator simplifies the process for expatriates, UAE nationals, and domestic workers across Dubai, Abu Dhabi, Sharjah, and other emirates. This article explores what the End of Service Calculator is, how it works, eligibility criteria, benefits, limitations, and tips for accurate calculations as of April 2025.

What is the End of Service Calculator UAE?

The End of Service Calculator UAE is a digital tool that computes gratuity payments based on an employee’s basic salary, length of service, contract type (limited or unlimited), and reason for termination (resignation or dismissal). Governed by the UAE Labour Law, particularly Article 51, gratuity is a mandatory benefit for employees in the private sector and, since November 2024, optionally for Emirati employees under the Ministry of Human Resources and Emiratisation (MoHRE) voluntary scheme. Calculators are available on platforms like dda.gov.ae, zoho.com, gratuitycalculator.ae, and gulfnews.com, providing estimates compliant with UAE regulations, including those for free zones like Jebel Ali Free Zone (JAFZA) and Dubai International Financial Centre (DIFC).

Why Use the End of Service Calculator UAE?

Gratuity calculations involve complex rules that vary by contract type, service duration, and termination circumstances, making manual computations error-prone. The End of Service Calculator offers several advantages:

• Accuracy: Uses UAE Labour Law formulas to provide precise gratuity estimates based on basic salary and service years.

• Time-Saving: Automates calculations, eliminating the need for manual formula application.

• Transparency: Breaks down how gratuity is computed, helping employees understand their entitlements.

• Financial Planning: Assists employees in budgeting for post-employment life, especially expatriates returning to their home countries.

• Employer Compliance: Helps HR professionals ensure timely and accurate payouts, avoiding disputes or MoHRE penalties.

The tool is particularly useful in a diverse workforce like the UAE’s, where over 5 million private-sector employees, including expatriates and domestic workers, rely on gratuity as a financial safety net.

How Does the UAE Gratuity System Work?

Gratuity, or end-of-service benefits, is a mandatory payment under Article 132 of the UAE Labour Law for employees completing at least one year of continuous service. The system is governed by Federal Decree-Law No. 33 of 2021, which replaced the 1980 Labour Law, and applies to private-sector workers, domestic workers, and, optionally, Emiratis via MoHRE’s investment fund scheme. Key aspects include:

• Eligibility:

  • Minimum one year of continuous service (unpaid absences excluded).

  • Applies to full-time employees (part-time workers may not qualify).

  • Covers expatriates, UAE nationals (via MoHRE scheme), and domestic workers.

  • Employees terminated under Article 120 (e.g., for gross misconduct) may lose gratuity.

• Calculation Basis:

  • Basic Salary: Only the last drawn basic salary is used, excluding allowances (housing, transport, overtime, bonuses).

  • Daily Wage: Basic salary ÷ 30 days.

  • Service Duration: Rounded to the nearest year, excluding unpaid leave.

• Contract Types:

  • Limited Contract (fixed-term, max 4 years, renewable):

    • 1–5 years: 21 days’ basic salary per year.

    • 5 years: 21 days for first 5 years + 30 days per additional year.

    • Total gratuity capped at 2 years’ basic salary.

    • Resignation before contract end may forfeit gratuity (Article 138).

  • Unlimited Contract (no fixed term):

    • <1 year: No gratuity.

    • 1–3 years (resignation): ⅓ of 21 days’ basic salary per year.

    • 3–5 years (resignation): ⅔ of 21 days’ basic salary per year.

    • 5 years (resignation) or termination (any duration): 21 days for first 5 years + 30 days per additional year, capped at 2 years’ salary.

  • Transition Note: Since 2021, unlimited contracts must transition to limited contracts, affecting gratuity calculations for existing employees.

• Free Zones:

  • JAFZA and DMCC follow UAE Labour Law but require final approval from their labour sections.

  • DIFC uses a different formula: 8.93% of basic salary for >5 years’ service.

• Payment Timeline: Gratuity must be paid within 14 days of contract termination, along with final settlement (e.g., unused leave, outstanding salary).

• MoHRE Scheme (2023): Employers can opt into an investment fund for Emirati employees, contributing to a gratuity pool. Employees can withdraw funds plus returns upon leaving or continue investing.

Example Calculation

For an employee with a basic salary of AED 10,000, employed from January 1, 2018, to April 30, 2025 (7 years, 4 months, rounded to 7 years):

• Limited Contract (Termination):

  • Daily Wage: 10,000 ÷ 30 = AED 333.33

  • First 5 years: 21 × 333.33 × 5 = AED 35,000

  • Additional 2 years: 30 × 333.33 × 2 = AED 20,000

  • Total: 35,000 + 20,000 = AED 55,000 (capped at 2 years’ salary, AED 240,000)

• Unlimited Contract (Resignation):

  • First 5 years: 21 × 333.33 × 5 = AED 35,000

  • Additional 2 years: 30 × 333.33 × 2 = AED 20,000

  • Total: 35,000 + 20,000 = AED 55,000

• Unlimited Contract (Resignation, 2 years):

  • Daily Wage: 333.33

  • 1–3 years: (⅓) × 21 × 333.33 × 2 = AED 4,666.62

  • Total: AED 4,666.62

The calculator automates these computations, adjusting for contract type and termination reason.

Eligibility for Gratuity in the UAE

To qualify for gratuity, employees must meet the following criteria:

• Service Duration: At least one year of continuous service (unpaid absences excluded).

• Employment Type: Full-time employees under limited or unlimited contracts. Domestic workers are eligible under separate regulations.

• Nationality: Expatriates (non-GCC) and Emiratis (via MoHRE scheme since 2023).

• Termination Conditions:

  • Resignation or employer-initiated termination after one year.

  • Employees terminated for gross misconduct (Article 120) may forfeit gratuity.

  • Limited contract resignations before completion may result in no gratuity (Article 138).

• Documentation: Valid employment contract, salary certificates, and records of service dates.

Claiming Your Gratuity

To receive your gratuity:

1. Submit Documentation: Provide employment contract, salary certificates, and service records to HR.

2. Request Final Settlement: Ensure gratuity, unused leave, and outstanding salary are included within 14 days of termination.

3. Verify Payment: Use the calculator to cross-check the employer’s payout.

4. Resolve Disputes: Contact MoHRE (800 60, www.mohre.gov.ae) or a labour lawyer if payments are delayed or incorrect.

5. Free Zone Approval: For JAFZA or DMCC, obtain labour section approval for final calculations.

Conclusion

The End of Service Calculator UAE is an indispensable tool for employees and employers navigating the complexities of gratuity payments under UAE Labour Law. By factoring in basic salary, service duration, contract type, and termination reason, it provides accurate estimates to support financial planning and compliance.