A full-time foreign worker in the UAE, after completing one or more years of continuous service, is entitled to end-of-service gratuity calculated as 21 days' wage for each year of the first five years of service, and 30 days' wage for each year beyond that, provided the total gratuity does not exceed two years' wage no matter how long the service lasts.
The Formula for Calculating End-of-Service Gratuity
Federal Decree-Law No. (33) of 2021 on the Regulation of Labour Relations provides that "a foreign worker working under the full-time work pattern, who has completed one or more years of continuous service, is entitled to end-of-service gratuity upon termination of their service, calculated on the basis of the basic wage, as follows: a. a wage of twenty-one (21) days for each year of the first five years of service. b. a wage of thirty (30) days for each year in excess of that." Gratuity for part of a year is also calculated in proportion to the time worked during it, provided the worker has completed a full year of continuous service.
How the Two Tiers Combine in Practice
In practice, if a foreign worker's continuous service exceeds the first five years, their gratuity is calculated in two consecutive tiers: the first at 21 days for each of those first five years, and the second at 30 days for each subsequent year until service ends, provided the combined total of both tiers does not exceed the two-year wage ceiling set by the law.
End-of-Service Dues Upon the Worker's Death
The right to end-of-service gratuity is not lost if the worker dies; the law requires the employer, in the event of a worker's death, to deliver to the worker's family any wages or financial dues owed to the worker, plus the end-of-service gratuity due under the law and its Executive Regulation, within a period not exceeding ten days from the date of death or from the date the employer becomes aware of it.
What Is Not Counted Within the Period of Service
The law excludes days of unpaid absence from work when calculating the period of service that qualifies for gratuity, expressly providing that "days of absence from work without pay shall not be included in calculating the period of service."
The Maximum Cap on End-of-Service Gratuity
No matter how long a foreign worker's service lasts, the law sets a ceiling that may not be exceeded, providing that "it is a condition of the foregoing that the total end-of-service gratuity of the foreign worker shall not exceed the wage of two years." The gratuity is calculated based on the worker's last basic wage for those paid monthly, weekly or daily, and on the average daily wage for those paid by piece rate. The employer is also entitled to deduct from this gratuity any amounts legally due to it or due under a court judgment.
Deadline to Pay a Worker's Dues After the Contract Ends
The law requires the employer to pay the worker's wages and all other dues, including end-of-service gratuity, within 14 days from the date the employment contract ends. A national worker's gratuity, however, is calculated under the legislation governing pensions and social security in force in the country, not under this formula specific to foreign workers.
Legal References
- Federal Decree-Law No. (33) of 2021 on the Regulation of Labour Relations — Article (15), Article (51), Article (53).
For questions about your specific situation, you can ask the UAE Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.