UAE labor law
UAE end-of-service gratuity (EOSB) — formula, eligibility, and a free calculator
Updated · Based on Federal Decree-Law No. 33 of 2021 (and Cabinet Resolution 1 of 2022)
End-of-service gratuity — known locally as EOSB, end-of-service benefit, or simply gratuity — is a lump-sum payment UAE private-sector employers owe their workers when employment ends. This guide explains the calculation under the current law, the eligibility rules, and includes a calculator you can use for your own numbers.
Quick EOSB calculator
Estimate end-of-service gratuity under FDL 33/2021 Article 51. Uses your last basic monthly salary (excludes allowances).
How EOSB is calculated under FDL 33/2021
Article 51 of Federal Decree-Law No. 33 of 2021 sets a simple two-tier formula. For each full year of service in the first five years, the worker receives 21 days of their last basic wage. For each year of service beyond the fifth, the rate increases to 30 days. Partial years are pro-rated proportionally — half a year past your anniversary earns half that year's entitlement.
The formula uses the last basic monthly salary as the base, not an average over the employment term. If the worker received a raise in their final month, the entire gratuity is calculated on that higher figure.
What counts as "basic wage"?
Basic wage is the contractual base salary before any allowances: housing, transport, schooling, mobile phone, and ad-hoc bonuses are all excluded from the EOSB calculation. This is the figure printed on the offer letter and work-permit application as "basic salary", distinct from the larger "total wage" or gross salary that most employees use in conversation.
For employees on consolidated "total wage" contracts without an explicit basic/allowance split, the entire monthly wage is treated as basic — a meaningful difference for the gratuity payout.
When is gratuity payable?
Gratuity is payable to any worker who has completed at least one continuous yearof service when employment ends — regardless of which party terminated the contract. The historical "resignation reductions" under the previous labour law (which paid only 1/3 or 2/3 of the entitlement on early resignation) no longer apply under Federal Decree-Law 33/2021.
One important exception: workers terminated for serious misconduct as defined under Article 44 (theft, assault, falsified credentials, etc.) may lose entitlement to gratuity. The disciplinary procedure has to be followed correctly for this to apply — termination paperwork that doesn't cite Article 44 grounds can still leave the gratuity payable.
The 2-year cap
Article 51 caps total gratuity at 2 years' total wage. In practical terms, this cap only kicks in for long-tenured employees: a worker earning AED 10,000 basic monthly would hit the cap after roughly 20 years of service. For most resignations the cap is not the binding constraint; the day-count formula is.
If the calculation produces a number above 2 years' wages, the payable amount is capped — the excess is not owed. Our calculator above flags this automatically when the cap applies.
Worked example
An employee with a basic monthly salary of AED 12,000 who served 7 years would be entitled to:
- Years 1–5: 5 × 21 days = 105 days × (12,000 ÷ 30) = AED 42,000
- Years 6–7: 2 × 30 days = 60 days × (12,000 ÷ 30) = AED 24,000
- Total EOSB: AED 66,000
The 2-year cap (AED 288,000) is well above this figure, so it doesn't apply.
When must gratuity be paid?
All end-of-service entitlements, gratuity included, must be paid within 14 days of the end of the employment relationship under Article 53. Failure to pay on time exposes the employer to MOHRE complaints and administrative penalties.
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This guide is informational and does not constitute legal advice. Article references are to Federal Decree-Law No. 33 of 2021 unless otherwise noted. For employment in ADGM or DIFC jurisdictions, separate statutory regimes apply. Always confirm your specific case with a qualified UAE employment lawyer.