For an eligible employee in the federal traditional-gratuity system, the headline formula uses the last basic wage: 21 days for each of the first five years and 30 days for each additional year, with proportionate eligible partial-year service after one year and a ceiling of two years' wage.
Traditional federal gratuity using service length and last basic wage
What it cannot determineComplete final settlement, ADGM and DIFC qualifying schemes
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Federal traditional-gratuity model only. Gratuity uses last basic wage, while the statutory ceiling refers to two years of Wage. Confirm eligibility, Savings Scheme enrolment, wage components and service exclusions.
Formula used
Daily basic wage = last monthly basic wage ÷ 30. Gratuity = 21 daily basic wages per eligible year through year five + 30 daily basic wages per eligible year after year five. Days of unpaid absence are excluded from the service period, and the result is tested against the statutory two-year Wage ceiling.
Assumptions to verify
- At least one eligible year is completed.
- The employee is covered by the federal private-sector traditional gratuity system rather than an alternative scheme or separate jurisdiction.
- The last basic wage, total monthly wage used for the statutory ceiling and unpaid-absence days are accurate.
What this result does not prove
- ADGM gratuity, DIFC qualifying-scheme calculations and domestic-worker calculations.
- Savings Scheme employer contributions or investment value.
- Whether disputed absence, wage components or scheme enrolment change the underlying facts.
Use basic wage for the gratuity formula
Housing, transport and other allowances should not simply be added to the basic-wage formula. Start with the last basic wage shown in the employment/payroll record. The calculator asks for total monthly wage separately because the statutory ceiling is a different test from the 21-day/30-day formula.
Service length must be adjusted before the money formula
Do not calculate from calendar years alone if there were unpaid absences that must be excluded. First establish the employment start date, end date and days of unpaid absence. Then apply the gratuity bands to the eligible service period. This prevents a leave-record dispute from being hidden inside the final number.
Example: six eligible years on AED 6,000 basic wage
The daily basic wage is AED 200. The first five years produce 5 × 21 × AED 200 = AED 21,000. The sixth year produces 30 × AED 200 = AED 6,000. The formula amount is therefore AED 27,000 before testing the statutory ceiling and any fact-specific eligibility issue.
Resignation does not mean “no gratuity” by default
Older online explanations can still reflect historical limited-contract or resignation reductions. For current federal private-sector traditional gratuity, use the current official rule rather than an obsolete resignation table. What still matters is eligibility, service, basic wage, unpaid absence and whether the employee was enrolled in an alternative end-of-service system.
Gratuity is only one part of final settlement
Salary through the final day, unused annual leave, notice compensation, reimbursements and lawful deductions should appear as separate lines. Use the UAE Final Settlement Calculator when you need the complete exit estimate, or read the gratuity calculation guide for the rule boundaries.
Official sources
The links below are the primary references used for the rule or service described on this page. Check the live version before relying on a result.
Check the current official text, your contract, actual dates and records. Where facts are disputed, use the relevant authority or a qualified UAE professional.
Review official sourcesCalculate gratuity, then add salary, leave and notice in the full planner