Key Takeaways
What you'll learn in this article
  • The UAE overhauled its labour law with Federal Decree-Law No. 33 of 2021, in force since February 2022, which reshaped how gratuity works.
  • The old split between limited and unlimited contracts was removed; all private-sector contracts became fixed-term.
  • Once you complete one year of service, gratuity is based on length of service whether you resign or are terminated.
  • Gratuity is still calculated on basic salary, with 21 days per year for the first five years and 30 days per year after that, capped at two years' wage.
  • Free zones such as the DIFC and ADGM run their own end-of-service systems, including funded schemes, so mainland rules don't automatically apply.

End-of-service gratuity in the UAE is governed by federal labour law and administered, for mainland employees, by MOHRE — the Ministry of Human Resources and Emiratisation. The rules were significantly rewritten a few years ago, and a lot of advice online still describes the old system. This guide sets out what the current law actually says, so you're not planning around outdated information. To estimate your own figure under these rules, use the gratuity calculator.

The 2021 overhaul

The big reset was Federal Decree-Law No. 33 of 2021, which came into force in February 2022 and replaced the previous labour law that had stood for decades. If you're reading older guides that talk about "limited versus unlimited contracts" as the key to your gratuity, they're describing a system that no longer applies.

The end of "limited vs unlimited"

Under the old law, your contract type — limited (fixed-term) or unlimited — mattered enormously, especially for resignations. Resigning early under an unlimited contract could scale your gratuity down sharply.

The 2021 law abolished that distinction. All private-sector mainland contracts became fixed-term. With it went much of the old complexity around how you left.

Resignation rights under the current law

This is the change that matters most to people planning an exit. Under the current law, once you've completed one year of continuous service, your end-of-service gratuity is based on your length of service — whether you resign or your employer terminates you. The old penalty-style reductions for resigning early under unlimited contracts are gone.

(Specific deductions can still arise in limited circumstances — for example, certain serious-misconduct dismissals — so it's not "no conditions at all," but the headline is far simpler and fairer than the old regime.)

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What didn't change: the calculation

The core sum is unchanged and still surprises people:

  • Gratuity is calculated on basic salary, not total package.
  • 21 days' basic wage per year for the first five years.
  • 30 days' basic wage per year after five years.
  • Total capped at two years' wage.

We walk through this with a worked example in how UAE gratuity is calculated.

The free-zone exception

A crucial caveat: the financial free zones run their own employment law. The DIFC and ADGM are separate jurisdictions. Notably, the DIFC replaced traditional gratuity with the DEWS scheme — a funded workplace savings plan where the employer pays monthly contributions into an investment account, rather than a lump sum calculated at the end. So "what's my gratuity?" has a different answer depending on whether you're employed on the mainland or in a particular free zone. Always check which regime your employer falls under.

Turning the rules into a plan

Knowing the rules is step one; the money decisions come next:

This article is educational information, not legal advice, and reflects a general summary of the UAE labour law and MOHRE rules. The law has detailed conditions and free zones differ. Check the current official guidance and take professional advice on your specific entitlement.

Frequently Asked Questions
What is MOHRE?
MOHRE is the UAE Ministry of Human Resources and Emiratisation, the federal authority that regulates private-sector employment in the UAE mainland. It oversees employment contracts, labour disputes and the rules that govern end-of-service gratuity for mainland employees. Free zones such as the DIFC and ADGM have their own employment authorities and rules.
Did UAE gratuity rules change in 2022?
Yes. Federal Decree-Law No. 33 of 2021 came into force in February 2022 and replaced the previous labour law. Among other changes it ended the distinction between limited and unlimited contracts by making all private-sector contracts fixed-term, and it confirmed that employees who complete one year of service are entitled to gratuity based on their length of service.
Does resigning reduce my gratuity under the current UAE law?
Under the current law, once you have completed at least one year of continuous service, your gratuity is based on your length of service whether you resign or your employer terminates you. This differs from the old unlimited-contract rules, which could scale gratuity down for early resignations. Specific deductions can still apply in limited circumstances, so check your situation.
Do free zones follow the same gratuity rules as the mainland?
Not always. Financial free zones such as the DIFC and ADGM operate their own employment laws. The DIFC, for example, replaced traditional end-of-service gratuity with the funded DEWS scheme, where the employer pays monthly contributions into an investment plan. So your gratuity treatment depends on whether you are employed on the mainland or in a specific free zone.

Disclaimer: This article is for educational and informational purposes only. Nothing on ExpatMoneyMatters.com constitutes regulated financial advice. All figures and examples are illustrative. Your situation will differ. Always seek independent, regulated financial advice before making investment, mortgage or retirement decisions. Past performance is not a reliable indicator of future results.