How to Accurately Calculate Gratuity in the UAE?

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Hi everyone,

I’ve been trying to understand how end-of-service gratuity works in the UAE. From what I know, the rules are different for limited and unlimited contracts, and also depend on whether you resign or get terminated.

Some common questions I had:

  • Is gratuity always calculated on basic salary only, excluding allowances?

  • What’s the difference between limited vs unlimited contract gratuity in UAE?

  • Is there really a maximum cap of two years’ basic salary?

  • How does MOHRE’s latest update for 2025 affect calculations?

While searching, I came across this useful online tool: UAE Gratuity Calculator 2025 it lets you enter salary, contract type, and service duration to see the exact entitlement.

Would love to hear from others who have gone through the process how accurate are these calculators compared to what employers actually pay? Any tips to avoid mistakes in final settlement?

Thanks in advance

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Hi @Bailey_Forro

Here are my inputs on your inquiry:

  1. Yes gratuity is always calculated on the basic salary only and it is based on the last drawn salary
  2. Currently UAE only has 1 type of contract that is “limited contract” - the unlimited is already removed Article 51 of Federal Decree-Law No. 33 of 2021 refer on this article
  3. I am not sure about this MOHRE’s latest update for 2025 that you are referring to - can you expound on this more…

How to avoid mistakes? always refer to the MOHRE website as this is the only reliable source you can have, they are available to assist via email and even call. Avoid relying on unverified sources.

Ludy :slight_smile: