What is end-of-service gratuity?
End-of-service gratuity is the statutory terminal payment most UAE private-sector employees receive after at least one year of continuous service. It accrues at 21 days of basic salary for each of the first five years and 30 days for each year beyond, capped at two years' wages.
End-of-service gratuity is the statutory terminal payment most UAE private-sector employees receive after at least one year of continuous service. It accrues at 21 days of basic salary for each of the first five years and 30 days for each year beyond, capped at two years' wages.
The accrual
| Service | Entitlement |
|---|---|
| Under 1 year | No entitlement |
| 1–5 years | 21 days of basic salary per year |
| Beyond 5 years | 30 days of basic salary per additional year |
| Cap | Total not exceeding two years' wages |
The daily rate is basic monthly salary divided by 30. Allowances are excluded — housing, transport and similar do not count — which is why the basic-to-allowance split in an employment contract has a direct and often substantial effect on the eventual cost.
The point employers miss
It accrues from the first day of employment and grows with service, so it is a liability building continuously whether or not anyone records it. A business that does not provide for gratuity monthly is reporting profits it has not really made and carrying an unrecorded obligation — one that becomes visible at the worst possible moment, during a sale, a bank review, or a wave of departures.
For a business with long-serving staff, the accumulated figure is rarely small.
Reviewed 18 August 2026 by Ahmed Nabil Selim. UAE tax rates, thresholds and deadlines change — confirm the position for your period before relying on it.
What Is End-of-Service Gratuity — frequently asked
End-of-service gratuity is the statutory terminal payment most UAE private-sector employees receive after at least one year of continuous service. It accrues at 21 days of basic salary for each of the first five years and 30 days for each year beyond, capped at two years' wages.
Does this apply to you?
Definitions only go so far. Tell us how the business is set up and we will tell you where you actually stand.
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