Employees in the UAE, whether leaving a job due to resignation or dismissal, are legally entitled to financial compensation under the UAE Labour Law.
These entitlements, termed end-of-service benefits, encompass gratuity payments, final salary dues, and unused leave or bonus compensation.
As end of service UAE become more varied—covering full-time, part-time, and flexible contracts—workers and employers must understand how these benefits are calculated and what legal responsibilities must be met.
This article outlines the critical legal components of end-of-service benefits in the UAE as of 2025, including how gratuity is calculated, what rules apply under UAE Labour Law, and the components of a final settlement.
We’ll also explore the legal support available for resolving disputes or ensuring compliance with labour regulations.
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Table of Contents
Rules of End of Service UAE
Employees are legally eligible to receive end-of-service compensation when their employment contract ends—either through resignation, termination, or mutual agreement.
These payments typically include:
- Gratuity (Severance Pay).
- Outstanding salary payments.
- Accrued but unused leave days.
- Pending bonuses, incentives, or reimbursements.
Employers must settle all these dues within 14 days of the employee’s termination date, as stipulated under UAE Labour Law.
Who Is Eligible for Gratuity?
Expatriate employees in the UAE private sector are entitled to gratuity under the Labour Law, while UAE nationals receive retirement benefits through the national pension system.
All employees—whether full-time, part-time, or on flexible work arrangements—may qualify for gratuity, calculated proportionately to their working hours and length of service.
Gratuity Calculation in UAE
The end-of-service gratuity is based on an employee’s last basic salary, excluding allowances such as housing, transport, or utilities.
The calculation formula depends on the duration of service:
- Less than 1 year: No gratuity is due.
- 1 to 5 years of service: Entitled to 21 days’ basic yearly salary.
- Over 5 years: Entitled to 30 days’ basic salary for each year beyond five years.
The gratuity amount must not exceed the equivalent of two years’ total salary, and unpaid leave days are excluded from the calculation.
End of Service UAE Example:
Suppose an employee has a basic salary of AED 8,500 and has worked for 7 years. Their gratuity would be calculated as follows:
- First 5 years: (8,500 ÷ 30) × 21 × 5 = AED 29,750
- Years 6 and 7: (8,500 ÷ 30) × 30 × 2 = AED 17,000
- Total gratuity = AED 46,750
This example demonstrates how gratuity increases after completing five years of service, reflecting the shift from 21 days to 30 days of basic salary per additional year.
Learn about Gratuity Calculation in Free Zone UAE Laws.
End of services Obligations and Entitlements
The UAE Labour Law sets out key obligations and entitlements related to end-of-service payments:
- Employees must have at least one year of uninterrupted service to qualify for gratuity.
- Gratuity must be paid based on the final basic salary (excluding all allowances).
- Payment of gratuity and all other dues must be completed within 14 days of the contract’s end.
- Employers are allowed to deduct any outstanding financial obligations owed by the employee (e.g., loans, salary advances).
- The gratuity is calculated proportionally based on working hours for part-time and flexible work arrangements.
- Alternative End-of-Service Scheme: Employers may adopt a Savings Scheme, an investment-based approach to gratuity, as an alternative to the standard lump-sum gratuity model.
Final Settlement Breakdown
The final settlement is the complete financial package owed to an employee upon departure, covering:
- Any unpaid salary up to the last working day.
- Gratuity payout as per service duration.
- Compensation for unused annual leave.
- Outstanding bonuses, commissions, or performance incentives.
- Reimbursable expenses.
In cases where the employee owes money to the employer, those amounts may be deducted from the final settlement.
Read about Termination of Employment in UAE.
Legal Support for End-of-Service Cases in UAE
Dealing with end-of-service benefits can be complex, mainly when disputes arise over gratuity amounts, unpaid dues, or wrongful termination.
Our law firm in UAE offers a full suite of legal services to ensure compliance with UAE Labour Law and to support both employers and employees through the process.
Our Key Legal Services Include:
- Gratuity Calculation Support
We help employees and employers precisely calculate end-of-service gratuity in line with legal requirements, avoiding costly errors. - Legal Advice on Employee Rights
Our legal experts provide guidance on entitlements, contract interpretation, and proper handling of terminations. - Dispute Resolution and Representation
We represent clients in disputes brought before the Ministry of Human Resources and Emiratisation (MoHRE) or UAE labor courts, whether for unpaid gratuity, unlawful termination, or salary disputes. - Contract Review and Drafting
We offer in-depth reviews of employment contracts to ensure end-of-service clauses are clearly defined and legally compliant. - Employer Compliance Services
For businesses, we assist with setting up internal processes and HR practices to ensure full compliance with UAE Labour Law, including timely payment of end-of-service benefits.
FAQs about End-of-Service Matters in UAE
Understanding the legal framework governing end of service UAE is essential for both employees seeking fair compensation and employers aiming to remain compliant.
Gratuity, unpaid dues, and other end-of-service components must be handled with care, accuracy, and legal precision.
If you’re facing issues related to your final settlement or need professional help navigating the complexities of UAE labor law, our legal team is here to guide you.
Contact our law firm in UAE for expert help. Click the Whatsapp icon below.
A law graduate and legal writer focusing on UAE law, he became known for his ability to clarify complex legal concepts through his writings. His work simplifies the intricacies of the legal landscape in the Emirates, helping both locals and expatriates navigate their legal concerns.
