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UAE GRATUITY FORECAST
See how your UAE end-of-service gratuity grows year by year, what the monthly accrual rate looks like (5.83% of basic before year 5, 8.33% after), and how much an employer should set aside each month per Federal Decree-Law 33/2021.
Not legal advice.This forecast is for planning purposes only and is not a substitute for qualified UAE labour-law advice. Forecasts assume a constant basic salary; actual figures depend on raises, unpaid leave, and contract specifics. Always verify with your contract, HR, or a UAE employment lawyer before relying on these numbers.
Most UAE contracts use 60%.
HOW UAE GRATUITY ACCRUES OVER TIME
Under UAE Federal Decree-Law 33/2021, end-of-service gratuity is earned on a tiered schedule. For each of the first 5 years of continuous service, you accrue 21 days of basic salary per year. From the start of year 6 onward, the rate jumps to 30 days per year of service. Earlier years stay at the lower rate — the increase only applies forward.
Translated to a monthly accrual:
- Years 1–5: ~5.83% of basic salary per month (21 days ÷ 12 months ÷ 30 days × basic).
- Years 5+: ~8.33% of basic salary per month (30 days ÷ 12 months ÷ 30 days × basic).
For employers, this is the rule of thumb: set aside ~5.83% of each employee’s basic salary every month for the first 5 years, then ~8.33% from year 6. Doing this avoids a cashflow shock when an employee leaves.
For employees, the same numbers tell you what you’re really earning. Your gratuity is silent compensation that compounds with tenure, and it’s part of the reason staying at one UAE employer for 5+ years can be financially meaningful.
Does this work for Dubai, Abu Dhabi, Sharjah, and other emirates?
For mainland employment, yes — the federal law applies identically across all seven emirates: Dubai, Abu Dhabi, Sharjah, Ajman, Fujairah, Ras Al Khaimah, and Umm Al Quwain. The forecast and monthly accrual rates are the same regardless of which emirate your employer is in.
Two free-zone exceptions: DIFC in Dubai uses the DEWS savings scheme; ADGM in Abu Dhabi uses its own regulations. Both typically convert the gratuity liability into monthly contributions to a managed savings plan, so the underlying provisioning percentages (5.83% / 8.33% of basic) still apply, just differently mechanically.
The cap
Total gratuity is capped at 2 years’ basic salary — i.e. 24 monthly basics. At the 30-day rate, that ceiling is reached after roughly 25 years of total service (5 years at 21 days plus 20.5 years at 30 days). For most careers this is theoretical.
Salary changes
Gratuity is calculated on the basic salary at the time of termination, not a historical average. So if you get a raise in year 6, your gratuity for all 6 years recalculates upward. This forecast assumes your basic stays flat — reality usually gives you more.
How to fund it as an employer
The simplest approach is a separate bank account that you top up each month with the per-employee provisioning amounts. For larger teams, look at registered savings schemes such as the DIFC’s DEWS (DIFC Employee Workplace Savings Plan), which lets contributions grow rather than sit idle.
FREQUENTLY ASKED QUESTIONS
What is monthly gratuity provisioning?
It's the practice of setting aside a percentage of an employee's basic salary each month to fund the eventual end-of-service payment. For UAE employees in their first 5 years, the rate is roughly 5.83% of basic salary per month (21 days ÷ 12 months ÷ 30 days). After 5 years it rises to 8.33%.
Does this forecast work for Dubai, Abu Dhabi, Sharjah, and the other emirates?
Yes for mainland employers. UAE Federal Decree-Law 33/2021 applies identically across Dubai, Abu Dhabi, Sharjah, Ajman, Fujairah, Ras Al Khaimah, and Umm Al Quwain. The two free-zone exceptions are DIFC (Dubai International Financial Centre) and ADGM (Abu Dhabi Global Market) — these have their own employment laws and typically use savings schemes like DEWS rather than the tiered notional gratuity.
How does DEWS work in DIFC?
Inside DIFC, employers contribute monthly into the DIFC Employee Workplace Savings (DEWS) plan instead of accruing a notional gratuity. The default contribution rate matches the law — 5.83% of basic for the first 5 years, 8.33% after. Funds are invested and grow over time. On termination, the employee receives the savings balance, not a calculation based on years × days.
Why does the rate jump at the 5-year mark?
UAE Federal Decree-Law 33/2021 sets two tiers: 21 days of basic salary for each of the first 5 years of service, then 30 days for each subsequent year. The increase only applies to years of service accrued after the 5-year anniversary — earlier years stay at the lower rate.
When does the cap kick in?
Total gratuity cannot exceed 2 years' worth of basic salary (24 months × monthly basic). At the 30-day rate that's reached at roughly 25 years of total service. For most employees the cap is never relevant.
Should employers actually put money aside, or is this just bookkeeping?
Best practice is to genuinely reserve the money — either in a separate bank account, a money-market product, or via a registered end-of-service savings scheme such as DIFC's DEWS. Employees are entitled to be paid promptly on departure; an unfunded liability can become a cashflow problem.
Does this forecast assume a fixed salary?
Yes — it assumes the basic salary you enter stays constant across the forecast horizon. In reality salary tends to grow, so your actual gratuity will likely be higher. UAE law calculates gratuity on the basic salary at termination, so a raise in year 6 lifts the gratuity for all 6 years.
What if I take unpaid leave during my employment?
Strictly under the law, periods of unpaid leave should be deducted from your length of service for gratuity purposes. Most employers calculate on calendar service from start to end date for simplicity. Confirm with your HR.
Disclaimer — not legal advice
This calculator implements the formula in UAE Federal Decree-Law 33/2021 to the best of public guidance. It is a free tool provided as a convenience and does not constitute legal, accounting, or HR advice. Forecasts assume a constant basic salary and ignore unpaid leave, contract-specific clauses, and other factors that may affect actual entitlement. Always verify with your employment contract and HR department, or seek qualified UAE labour-law counsel before relying on these numbers.