# UAE Gratuity Calculation: How End-of-Service Benefits Work

> End-of-service gratuity is a legal right for UAE employees after one year. Here's exactly how it's calculated, with the 21-day and 30-day rules explained.

- URL: https://www.pyalm.com/blog/uae-gratuity-calculation-guide
- Author: Fadhil Abdulla
- Category: Pyalm Books
- Published: 2026-06-20
- Updated: 2026-06-20

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## What gratuity is

End-of-service gratuity (EOSB) is a lump sum UAE employers must pay employees who complete at least one year of continuous service. It's calculated on the **basic salary** only — not total pay. The free [UAE Gratuity Calculator](https://www.pyalm.com/free-tools/gratuity-calculator-uae) estimates it instantly.

## The calculation

First, find the daily wage: basic monthly salary × 12 ÷ 365. Then apply the service rules:

- **First 5 years** — 21 days of basic pay for each year.
- **Beyond 5 years** — 30 days of basic pay for each additional year.
- **Under 1 year** — no gratuity is due.

The total is capped at two years' wages.

## A worked example

On a basic salary of AED 9,000 over 6.5 years, the daily wage is about AED 296. You earn 21 days × 5 years plus 30 days × 1.5 years = 150 days, giving roughly AED 44,400.

## Basic vs total salary

Because gratuity uses basic pay, the basic-to-allowance split in a contract directly affects the payout. Use the [UAE Salary Calculator](https://www.pyalm.com/free-tools/salary-calculator-uae) to see the breakdown and employer cost.

[Use the free UAE Gratuity Calculator](https://www.pyalm.com/free-tools/gratuity-calculator-uae) | [UAE Salary Calculator](https://www.pyalm.com/free-tools/salary-calculator-uae)