How is End of Service Gratuity calculated in the UAE?

Under Article 51 of UAE Labor Law (Decree-Law 33/2021), End of Service Gratuity is calculated based on the employee's LAST BASIC SALARY: 21 days basic salary for each year of service during the first 5 years, and 30 days basic salary for each additional year thereafter. Total payout cannot exceed 2 years gross salary.

What is the UAE Voluntary Workplace Savings Scheme?

Introduced under Cabinet Resolution No. 96 of 2023, the Voluntary Alternative End of Service Scheme allows employers to deposit monthly employee end-of-service contributions into approved investment funds (capital-protected, low-risk, or high-risk) rather than paying a lump-sum gratuity at the end of employment.

Is end-of-service gratuity reduced if an employee resigns?

No. Under the updated UAE Labor Law (Decree-Law 33/2021), there is no longer any reduction in gratuity payout based on resignation versus termination. As long as the employee completes 1 year of continuous service, full gratuity is paid.

Home/Uae/Gratuity Voluntary Savings Scheme Guide

Labor Law 33/2021 Article 51 & Cabinet Resolution 96/2023

UAE End of Service Gratuity & Savings Scheme

Complete guide to statutory End of Service Gratuity formulas, DIFC DEWS, and the UAE Voluntary Workplace Investment Savings Scheme replacing traditional lump-sum payouts.

Modernizing End-of-Service Wealth Protection

The UAE has modernized end-of-service benefits by introducing the Voluntary Alternative End of Service Scheme under Cabinet Resolution No. 96 of 2023 alongside traditional statutory End of Service Gratuity (Article 51).

Employers can choose between paying a traditional lump-sum gratuity or making monthly contributions into accredited investment funds (such as DIFC DEWS).

Statutory End of Service Gratuity (Labor Law 33/2021)

Payout Model: Lump-Sum Payment upon Employment Termination

Calculation Formula: 21 days basic salary per year for years 1-5; 30 days basic salary per year thereafter

Payout Limits: Maximum total gratuity payout capped at 2 years gross salary

Traditional Gratuity Rules (Article 51)

1. Years 1 to 5: 21 days of basic salary for each year served
2. Years 5+: 30 days of basic salary for each additional year served
3. Pro-Rata Payment: Fractional years calculated on exact pro-rata basis
4. Unpaid Absence Deductions: Unpaid leave days are excluded from total tenure
5. Payment Deadline: Gratuity must be paid within 14 days of final contract end date

Voluntary Savings Investment Options

🛡️ Capital Protected Fund

100% capital guaranteed option for risk-averse employees preserving principal end-of-service capital.

⚖️ Balanced / Growth Risk Funds

Equities, bonds, & Sharia-compliant funds offering higher expected capital growth.

💳 Voluntary Employee Contributions

Employees can voluntarily top-up up to 25% of basic salary into the scheme monthly.

Frequently Asked Questions

Under Article 51 of Labor Law 33/2021, gratuity is based on the LAST BASIC SALARY: 21 days basic salary for years 1-5, and 30 days basic salary for each year thereafter. Max cap is 2 years gross salary.

Under Cabinet Resolution 96/2023, employers deposit monthly contributions (5.83% or 8.33% basic salary) into approved investment funds instead of paying a lump-sum gratuity at contract end.

No. Under Decree-Law 33/2021, gratuity reductions based on resignation are abolished. Full gratuity is paid as long as 1 year of continuous service is completed.

🧮 MoHRE End of Service Gratuity Calculator →🐷 DIFC DEWS Workplace Pension Scheme Guide →💼 UAE Labour Laws & Employment Rights Guide →

MoHRE & SCA Verified

• MoHRE End of Service Portal: mohre.gov.ae
• Securities and Commodities Authority (SCA): sca.gov.ae