For an eligible employee in the federal traditional-gratuity system, gratuity generally uses the last basic wage: 21 days for each eligible year through year five and 30 days for each additional year, with proportionate eligible partial-year service after one year. Days of unpaid absence are excluded from service and the result is subject to a ceiling of two years' wage.
Eligibility, formula, service bands, partial years, unpaid absence and savings-scheme boundaries
When you need another routeADGM and DIFC calculations
Confirm the end-of-service system before calculating
The federal traditional formula is not universal across every UAE employee. Savings Scheme participation, ADGM, DIFC and domestic-worker rules require separate treatment.
- Confirm the legal employment jurisdiction.
- Check whether the employee was enrolled in the federal Savings Scheme.
- For traditional federal gratuity, confirm at least one eligible year.
- Do not combine an alternative-scheme balance with a traditional-gratuity estimate for the same covered period.
Use the last basic wage for the gratuity formula
The gratuity bands use basic wage rather than simply the employee's full salary package. Keep allowances visible but separate from the formula input.
- Identify the last monthly basic wage.
- Do not substitute gross salary merely because that is the bank credit.
- Keep salary amendments that changed basic wage.
- Keep the total wage separately where the statutory ceiling is being tested.
Apply the service bands after adjusting service
First determine eligible service, including excluded unpaid absence; then apply the 21-day and 30-day bands. This makes partial years and disputed absence visible.
- Basic wage ÷ 30 gives the daily basic wage used by the calculator.
- First five eligible years: 21 days per year.
- Additional eligible years: 30 days per year.
- Eligible partial years after one year are calculated proportionately.
Audit the inputs before arguing about the total
Most real disputes are not multiplication errors. They concern the wage basis, start/end dates, unpaid absence, scheme status or a missing settlement line.
- Contract and salary amendments
- Start and termination dates
- Unpaid-absence records
- Savings Scheme or qualifying-scheme statements
- Employer's gratuity calculation and final settlement
Worked example: 6 years, AED 6,000 basic wage
Daily basic wage is AED 200. Years 1–5: 5 × 21 × AED 200 = AED 21,000. Year 6: 1 × 30 × AED 200 = AED 6,000. Formula amount: AED 27,000 before the statutory ceiling and any fact-specific adjustment. If unpaid absence must be excluded, adjust the eligible service period before applying the bands.
What about resignation?
Do not rely on older web pages that automatically reduce current federal gratuity because an employee resigned. Historical rules and old contract categories still appear in search results. Use the current official federal rule, then check eligibility, service, wage basis, unpaid absence and alternative-scheme status.
What does “two-year wage cap” mean?
The cap is a ceiling after the gratuity formula, not a replacement for the basic-wage calculation. The calculator therefore shows the formula amount and cap test separately. Keeping both numbers visible makes long-service cases easier to audit.
Where unpaid leave fits
The federal rule excludes days of unpaid absence from the service period used for traditional gratuity. If that is your main question, use the dedicated unpaid leave and gratuity guide, which separates salary deduction from service impact.
Choose the tool that matches the question you are trying to verify.
Official sources and limitations
Each source supports a defined part of this overview. It does not confirm your contract facts, payroll records or jurisdiction. Open the live authority page when you are preparing a complaint, settlement or job-exit decision.