Is housing allowance included in gratuity?

No. Only the basic salary shown on your MOHRE contract is used.

How soon must gratuity be paid?

Employers must pay within 14 days of your last working day.

Do limited contracts get pro-rata for partial years?

Only if the employer terminates early without cause; otherwise full years only.

Can gratuity be paid in cash?

Standard practice is bank transfer to your UAE account.

UAE End of Service Gratuity 2026: Exact Calculation

Who receives end-of-service gratuity in 2026

Any employee who has completed at least one full year with the same employer receives gratuity when the contract ends. MOHRE sets the calculation and enforces payment within 14 days of the final working day.

Basic salary used for calculation

Gratuity uses only the basic salary stated in your MOHRE work permit. Housing allowance, transport, or other benefits are excluded. Confirm the figure on your contract and salary certificate.

Formula for unlimited contracts

Step 1: Take your basic monthly salary.
Step 2: Multiply by 21 days for each of the first five years.
Step 3: Multiply by 30 days for each year after five years.
Step 4: Divide the total by 30, then multiply by the exact number of days worked in the final incomplete year.

Example: Basic salary AED 15,000. Five years completed plus 200 days in year six.
Gratuity = (15,000 × 21 × 5) + (15,000 × 30 × 200 ÷ 30) = AED 1,575,000 + AED 300,000 = AED 1,875,000.

Formula for limited contracts

Step 1: Use the same daily rate as unlimited contracts.
Step 2: Apply the same 21-day and 30-day multipliers.
Step 3: Multiply by completed years only; no pro-rata for the final partial year unless the contract is terminated early by the employer without cause.

Example: Basic salary AED 12,000 on a three-year limited contract completed in full.
Gratuity = 12,000 × 21 × 3 = AED 756,000.

Deductions and employer obligations

Employers may deduct any outstanding loans or advances recorded in writing.
No deduction is allowed for normal wear of company equipment or minor damages.
Payment must be transferred to your UAE bank account; cash or foreign transfer is not standard.

Tax treatment in 2026

End-of-service gratuity remains fully exempt from UAE personal income tax. Keep the final payslip and MOHRE settlement letter for your records and any future visa applications.

Common calculation errors to avoid

Using total package salary instead of basic salary.
Counting months instead of actual calendar days in the final year.
Forgetting to update MOHRE records after a salary increase.

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