How Is EOSB Calculated in UAE?

EOSB Calculation in UAE: How Gratuity Actually Works

If you're leaving a UAE job and trying to figure out what you're owed, the end-of-service benefit (EOSB) — sometimes called gratuity — is usually the biggest number on your final settlement. Here's how the math actually works under Federal Decree-Law No. 33 of 2021.

Quick answer

EOSB calculation in UAE is based on your last basic salary (not gross) and your years of continuous service. You get 21 days of basic pay per year for the first 5 years, then 30 days per year for each additional year. The total cannot exceed two years of basic salary. Unpaid leave days don't count toward service. If you resign on a limited contract before completing a year, you typically get nothing — completed years matter. Allowances (housing, transport, etc.) are excluded from the calculation.

The formula, step by step

Take your last basic monthly salary. Divide it by 30 to get a daily rate. That's your starting point.

Now multiply:

• Years 1–5: daily rate × 21 × number of years
• Year 6 onward: daily rate × 30 × number of additional years

Add the two together. Cap the total at 2 years of basic salary ^[1].

Example. Basic salary AED 10,000. Service: 7 years.

• Daily rate: 10,000 ÷ 30 = AED 333.33
• First 5 years: 333.33 × 21 × 5 = AED 35,000
• Next 2 years: 333.33 × 30 × 2 = AED 20,000
• Total EOSB: AED 55,000

Partial years after the first completed year are paid pro-rata. So if you served 5 years and 6 months, you'd get the 5-year amount plus half of the 30-day entitlement for year 6.

What counts as "basic salary"

This is where most people get tripped up. Your employment contract splits your pay into basic and allowances. EOSB is calculated only on the basic component — housing, transport, education, and other allowances are excluded under Article 51 of the Labour Law ^[1].

If your AED 20,000 monthly package is structured as AED 8,000 basic + AED 12,000 allowances, your EOSB is calculated on AED 8,000. Frankly, this is why some employers structure contracts with a low basic and fat allowances. Legal? Yes. Generous? No.

One nuance: commissions and variable pay are generally excluded too, unless your contract says otherwise.

Resignation vs termination: does it matter anymore?

Under the old law, employees who resigned on unlimited contracts before 5 years got reduced gratuity (one-third or two-thirds). That's gone.

Federal Decree-Law No. 33 of 2021 — in force since 2 February 2022 — abolished unlimited contracts entirely. All private-sector contracts are now fixed-term. And the gratuity entitlement is the same whether you resign or are terminated, provided you've completed at least one full year of continuous service ^[1][2].

Exceptions still exist. If you're dismissed for gross misconduct under Article 44, the employer can still pay EOSB but won't owe notice. Termination without notice for the reasons in Article 44 is a separate question from gratuity — gratuity is generally protected once you cross the one-year mark.

Unpaid leave days are excluded from the service calculation. So if you took 30 days unpaid in a 5-year stint, your service is 5 years minus 30 days.

DIFC and ADGM work differently

If you work in the Dubai International Financial Centre (DIFC) or Abu Dhabi Global Market (ADGM), the federal labour law doesn't apply to you.

DIFC moved to a funded scheme called DEWS (DIFC Employee Workplace Savings) in February 2020. Instead of a lump sum at the end, your employer contributes monthly — 5.83% of basic salary for the first 5 years, 8.33% thereafter — into a managed fund ^[3]. You take the accumulated balance when you leave.

ADGM has a similar shift toward funded end-of-service schemes. If your employer is in ADGM, check whether they've enrolled you in a qualifying scheme or still operate the traditional lump-sum model.

For the rest of the UAE — mainland and most other free zones — the federal formula above applies.

Watch out: Employers must pay your final dues, including EOSB, within 14 days of your last working day under Article 53 of the Labour Law. Late payment can be escalated to MOHRE (the Ministry of Human Resources and Emiratisation) ^[1].

What to do if the math doesn't match

Run the calculation yourself before you sign the final settlement. Employers make mistakes — sometimes honest, sometimes not.

If the figure your employer offers is lower than what the formula produces, ask for a written breakdown. Check:

• Are they using the correct basic salary (your last one, not an older figure)?
• Are they excluding unpaid leave correctly, or chopping more than they should?
• Have they applied the 21/30-day split properly past the 5-year mark?
• Are they capping at 2 years of basic salary only if you've actually hit that cap?

Disputes go to MOHRE first via the labour complaint system, then to the Labour Court if unresolved. Claims under AED 50,000 follow an expedited track. You generally have one year from the end of the employment relationship to file a claim under Article 54 ^[1].

For broader context on ending a job properly, see our guide to employment law in the UAE.

Citations

^[1] Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, Articles 51, 53, 54 — UAE Ministry of Human Resources and Emiratisation. https://www.mohre.gov.ae

^[2] Cabinet Resolution No. 1 of 2022 on the Implementation of Federal Decree-Law No. 33 of 2021. https://www.mohre.gov.ae

^[3] DIFC Employee Workplace Savings (DEWS) Scheme — DIFC Authority. https://www.difc.ae/business/operating/employment/dews

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