How to Calculate End of Service in UAE with Complete Accuracy

How to calculate end of service in UAE is something every employee should master. If you’re leaving a job, you deserve to know exactly how your final payout is worked out without any doubts. In the UAE, the end-of-service gratuity depends on your basic salary, how long you’ve worked, and whether you’ve crossed the five-year mark. Let’s walk through the process, check the rules, and show you real examples so you get confident in calculating what you’re owed.

1. Introduction

If you’ve ever wondered how to calculate the end of service in UAE then you’re not alone, and getting it right matters. Use this article to check your entitlements carefully. At the end of your employment, your end-of-service gratuity isn’t a bonus & it’s a legal right under UAE labour law, based on your basic salary and years of service. This is a breakdown of the formula, and it walks you through examples and highlights important conditions, so you can make sure you’re getting what you truly deserve.

2. How to Calculate End of Service in UAE? | Process

• Confirm Your Eligibility- To calculate end of service in UAE, first check whether you’re eligible under the Federal Decree-Law No. 33 of 2021. Also, you must have worked for at least one continuous year to qualify for gratuity. Also note that days of unpaid leave generally do not count towards this service
• Use Your Basic Salary – When you calculate end of service in UAE, you must use only your basic salary, excluding allowances, bonuses, or other benefits.
• Find Your Daily Basic Wage- Divide your monthly basic salary by 30, regardless of how many days were in that month, to get your daily basic wage. For eg, If your basic salary is AED 10,000, then daily wage = 10,000 ÷ 30 = AED 333.33

Calculate Gratuity Based on Years of Service

Here’s how to do the math for your entitlement:
For the first five years, multiply the daily basic wage × 21 days × number of years up to 5 years.
For every year beyond five, multiply daily basic wage × 30 days × the number of years beyond the first five. Finally, add both amounts to get your total gratuity.

• Apply the Cap- When you calculate end of service in UAE, remember that there’s a cap & your total gratuity must not exceed the equivalent of two years’ basic salary. So even if your service or calculation gives a higher number, legally you can’t be paid more than 24 months of your last basic salary.
• Prorate for Partial Years- If you’ve worked a fraction of a year, say, months or days beyond your last full year, you calculate that part proportionally & take the last year’s gratuity, divide by 12 (months), then by 30 (days), and multiply by the number of days in the fraction.
• Payment Timeline- According to UAE law, your employer must pay your end-of-service gratuity within 14 days of your last working day.

3. Common Mistakes People Make When Calculating End of Service in UAE

A lot of employees and even HR teams get the numbers wrong because of avoidable mistakes. Since you want a clean understanding of how to calculate end of service in UAE, here are the most frequent errors to watch out for:

• Using Total Salary Instead of Basic Salary- This is the biggest one. If your contract inflates your allowances and keeps your basic salary low, your gratuity drops sharply. Always base your calculation on the exact basic salary mentioned in your contract.

• Ignoring Unpaid Leave- Unpaid leave doesn’t count toward your service length. If you had months of unpaid time off, your gratuity might be slightly reduced.
• Rounding Service Years Incorrectly- You cannot round a year up. If you worked 4 years and 8 months, calculate those 8 months proportionally, not as a full extra year.
• Forgetting the Two-Year Cap- Even if you’ve served for decades or have a high salary, the total payout can’t exceed two years’ worth of basic salary. It’s a legal limit, not a negotiable one.
• Assuming Resignation Reduces Gratuity- Under current UAE labour legislation, resignation no longer reduces your gratuity, a rule many still misunderstand. This simplifies how to calculate end of service in UAE and protects employees from previous deductions.
• Not Verifying the Timeline- Some employees wait months for their payout because they didn’t realize employers have only 14 days to settle. Knowing this helps you take action faster and avoid unnecessary delays.

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4. Key Pointers

• If your service is less than one year, you’re not eligible for gratuity.
• Make sure the basic salary in your contract is clearly defined. If the basic salary is low compared to your total package, your gratuity will accordingly be lower.
• If your employer delays payment beyond 14 days after your last day, you have the legal right to complain.
• If you’re under part-time or flexible work arrangements, the formula is adjusted pro rata.
• In unusual cases like acquiring UAE citizenship during service, specific rules may apply.

5. FAQs

Do unpaid leave days count when I calculate end of service in UAE?
No, generally, unpaid absence days are not included as part of the service period for gratuity

Is gratuity calculated on gross salary or just basic salary?
It’s calculated only on your basic salary, not on allowances, bonuses, or benefits.

What if I worked 4 years and 3 months? How do I calculate that?
You prorate the fraction: take the last full-year gratuity, divide by 12, then by 30, and multiply by the extra days.

My employer hasn’t paid my gratuity 14 days after I left. What can I do?
You can file a labour complaint with MOHRE; late payment is against the law.

6. Conclusion

Understanding how to calculate end of service in UAE gives you clarity, confidence, and control over your final settlement. When you know the exact formula, the role of basic salary, the cap, and how your service years are counted, you’re far better prepared to question errors and protect what you’ve earned. Use this article as your reference whenever you switch roles or review your employment terms. And if you want your calculation done accurately, backed by compliance and clear documentation, Arnifi can handle the entire end-of-service process for you with zero hassle.