Impact of Salary Reduction on UAE Gratuity Calculation

Sep 22, 2026

60 min

Sep 22, 2026 04:30

UAE gratuity calculation: What happens if your basic salary is reduced?

## Understanding Gratuity Calculation

In the UAE, end-of-service gratuity for private-sector employees is calculated based on the last basic wage. This gratuity is typically 21 days of basic wage for each of the first five years of service and 30 days for each subsequent year, subject to a statutory cap.

## Legal Implications of Salary Reduction

A salary reduction can affect the gratuity amount if it changes the basic wage. However, under UAE Federal Decree-Law No. 33 of 2021, any change to the basic salary must be agreed upon and documented. This means an employer cannot unilaterally reduce an employee's salary without written consent.

## Employee Rights and Actions

If an employee's salary is reduced without their agreement, they may have grounds to argue that their original salary should be used for gratuity calculations. Employees should document their objection to any unauthorized salary reduction in writing.

## Steps to Take if Disputing Gratuity Calculation

Employees should retain all relevant documents, including the original employment contract, any revised contracts, and records of salary payments. If an employer refuses to adjust the gratuity calculation, the employee can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE).

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