Understanding UAE Gratuity Calculation: Basic vs. Gross Salary

May 1, 2026

80 min

May 1, 2026 07:31

Is UAE gratuity calculated on basic salary or gross salary?

## Gratuity Calculation in the UAE

In the UAE, many employees are uncertain about how their end of service gratuity is calculated. The key question is whether it is based on the basic salary or the gross salary, which includes allowances.

## Basic vs. Gross Salary

The basic salary is the fixed amount specified in an employment contract, while the gross salary includes additional allowances such as housing or transport. Understanding this distinction is crucial as gratuity is calculated solely on the basic salary.

## Legal Clarification

According to UAE Labour Law, specifically Article 51, gratuity for full-time workers is calculated on the basic wage. This excludes any allowances or benefits in kind. The law defines 'wage' as the basic salary plus any cash allowances and benefits specified in the employment contract.

## Gratuity Calculation Rules

- Less than one year of service: No gratuity is paid. - One to five years of service: 21 days’ basic salary per year. - More than five years: 21 days’ basic salary for the first five years, plus 30 days’ basic salary for each additional year. - Maximum limit: Gratuity cannot exceed two years’ total salary.

## Example Calculation

For an employee with a basic salary of Dh9,000 and a total wage of Dh10,000, working for 30 years, the gratuity calculation would be capped at two years' total salary, despite the calculated gratuity being higher.

## Checking Your Basic Salary

Your basic salary is detailed in your employment contract, accessible via the MOHRE or UAE Pass apps. This information is essential for understanding your potential gratuity payout.

Read the full story at the source

What you need to know to get Emirates ID?

Leave your details and get a guide as a gift to avoid mistakes

Article contents