UAE End of Service Gratuity Calculator — 21 and 30 Days Per Year
Calculate UAE end-of-service gratuity under MOHRE law. 21 days per year for first 5 years and 30 days per year afterwards on basic salary.
UAE labour law (Federal Decree-Law No. 33 of 2021) entitles expatriate employees to an end-of-service gratuity paid by the employer when employment ends. The calculation is based strictly on your basic salary — not including allowances for housing transport or bonuses. For the first 5 years of service you earn 21 calendar days of basic salary per year. From year 6 onwards you earn 30 calendar days per year. Total gratuity is capped at two years basic salary. Gratuity is paid in full when employment ends regardless of whether you resign or are terminated provided you have completed at least 1 year of continuous service. For UAE nationals a different pension scheme applies (GPSSA) and gratuity does not apply. Our calculator shows the exact amount based on your basic salary and length of service.
How much gratuity for 7 years service in UAE?
On a monthly basic salary of AED 10000 with 7 years service: first 5 years = 21 × 5 × (10000/30) = AED 35000. Next 2 years = 30 × 2 × (10000/30) = AED 20000. Total gratuity: AED 55000. Daily rate is always basic salary divided by 30. Partial years are calculated proportionally. On a basic salary of AED 15000 over 10 years: (21 × 5 + 30 × 5) × (15000/30) = 255 days × AED 500 = AED 127500.
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How Tax Calculation Works
Income tax is calculated on your total taxable income after deducting eligible exemptions and deductions from your gross income. The tax is applied progressively — you pay a lower rate on initial income slabs and higher rates only on income that exceeds each threshold. This means moving into a "higher tax bracket" does not mean your entire income is taxed at the higher rate. Understanding marginal vs effective tax rate is crucial: your marginal rate applies only to the last rupee earned, while your effective rate is the average across all slabs.
Tax-Saving Strategies
Under the old regime, maximize deductions: Section 80C allows up to Rs 1.5 lakh through PPF, ELSS, EPF, and life insurance. Section 80D covers health insurance premiums up to Rs 25,000 (Rs 50,000 for senior citizens). Section 80CCD(1B) offers an additional Rs 50,000 deduction for NPS contributions. Home loan interest up to Rs 2 lakh is deductible under Section 24. Under the new regime, the Rs 75,000 standard deduction and lower slab rates may save you more if your total deductions are below Rs 3.75 lakh. Calculate under both regimes before choosing.
Key Information
| Parameter | Details |
|---|---|
| First 5 Years | 21 days basic salary per year |
| After 5 Years | 30 days basic salary per year |
| Minimum Service | 1 year (no gratuity if less) |
| Maximum Gratuity | 2 years basic salary |
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Use Calculator NowFrequently Asked Questions
How much gratuity for 7 years service in UAE?
On a monthly basic salary of AED 10000 with 7 years service: first 5 years = 21 × 5 × (10000/30) = AED 35000. Next 2 years = 30 × 2 × (10000/30) = AED 20000. Total gratuity: AED 55000. Daily rate is always basic salary divided by 30. Partial years are calculated proportionally. On a basic salary of AED 15000 over 10 years: (21 × 5 + 30 × 5) × (15000/30) = 255 days × AED 500 = AED 127500.
Is gratuity paid if I resign in UAE?
Yes under the new 2022 law gratuity is paid in full whether you resign are terminated or your limited contract ends — as long as you have completed at least 1 year of continuous service. The old rule that reduced gratuity for resignation under limited contracts was removed. However if you are dismissed for gross misconduct under Article 44 the employer can refuse to pay gratuity. Notice period must also be honoured (typically 30 days) otherwise your final settlement may be reduced. The employer must pay gratuity within 14 days of the end of service.
What salary components count for UAE gratuity?
Only basic salary counts for gratuity calculations — allowances do not. This often surprises expats because housing transport and utility allowances can be 40-50% of total compensation in UAE packages. Example: total salary AED 20000 with AED 8000 basic + AED 12000 allowances. Gratuity is calculated only on AED 8000 basic. After 5 years: 21 × 5 × (8000/30) = AED 28000 — much less than calculated on total pay. When negotiating a UAE offer always check the basic-to-allowance split since it significantly affects your long-term end-of-service payout.
Which tax regime should I choose — old or new?
Choose the new regime if your total deductions are below Rs 3.75 lakh. Choose the old regime if you claim HRA, 80C (Rs 1.5L), 80D, home loan interest, and NPS totaling more than Rs 3.75 lakh. Salaried employees can switch every year.
Is income up to Rs 12 lakh really tax-free?
Under the new regime for FY 2025-26, income up to Rs 12 lakh is effectively tax-free due to Section 87A rebate. After Rs 75,000 standard deduction, taxable income is Rs 11.25 lakh which qualifies for full rebate. However, income even slightly above Rs 12 lakh loses this entire benefit.
How can I save more tax legally?
Under the old regime, maximize 80C (Rs 1.5L via PPF, ELSS, EPF), 80D (Rs 25K-50K for health insurance), 80CCD(1B) (Rs 50K for NPS), HRA exemption, and home loan interest (Rs 2L under Section 24).
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Last updated: March 2026