What Is End-of-Service Gratuity?

Gratuity is a lump-sum payment your employer is legally required to pay you when your job ends — whether you resign, are terminated, or your contract simply expires. It exists to recognise your years of service and give you some financial security between jobs.

Across the UAE, Saudi Arabia, and Qatar, a few rules are shared in common:

• You generally need at least one full year of continuous service with the same employer to qualify.
• Gratuity is calculated on your basic salary only — housing allowance, transport allowance, bonuses, and commissions are not included unless your contract says otherwise.
• It is paid as a one-time lump sum, not added to your monthly pay.
• In all three countries, gratuity is tax-free, since there’s no personal income tax for employees.

Beyond that, the actual formula is different in each country — which is exactly why a single calculator that handles all three properly is more useful than a generic one.

How Gratuity Is Calculated in the UAE

Under UAE Federal Decree-Law No. 33 of 2021 (Article 51), end-of-service gratuity is calculated as:

• 21 days’ basic salary for each of your first 5 years of service
• 30 days’ basic salary for each year beyond that
• Capped at a maximum of 24 months’ (2 years’) basic salary, no matter how long you’ve worked

This applies the same way whether you resign or are terminated — UAE law no longer reduces gratuity for resigning early, unlike some other Gulf countries. Note that some free zones, like DIFC and ADGM, run their own separate schemes (such as DIFC’s DEWS savings plan) rather than the standard formula above.

How Gratuity Is Calculated in Saudi Arabia (KSA)

Saudi gratuity, under Articles 84 and 85 of the Saudi Labor Law, uses a different formula:

• Half a month’s wage for each of your first 5 years of service
• A full month’s wage for each year beyond that

The big difference from the UAE: how your job ended changes the amount you actually receive.

• If you’re terminated by your employer (without cause) or your contract simply ends, you get the full amount above.
• If you resign, the amount is reduced based on your length of service:
  • Under 2 years: no gratuity
  • 2 to 5 years: one-third of the full amount
  • 5 to 10 years: two-thirds of the full amount
  • 10+ years: full amount, same as termination

There are a few exceptions where a resigning employee still gets the full amount regardless of tenure — for example, under Article 87, if a woman resigns within six months of marriage or three months of giving birth, or if anyone leaves due to force majeure beyond their control.

How Gratuity Is Calculated in Qatar

Qatar’s rule, under Article 54 of Labour Law No. 14 of 2004, is the simplest of the three:

• 21 days’ basic salary for every completed year of service — with no escalation after 5 years, and no maximum cap

Unlike Saudi Arabia, it doesn’t matter whether you resign or are terminated — the calculation is the same either way, as long as you’ve completed at least one year and weren’t dismissed for serious misconduct.

Frequently Asked Questions

Is gratuity calculated on my basic salary or my total salary?

Basic salary only, in all three countries. Allowances for housing, transport, utilities, and any bonuses or commissions are excluded — even if they make up a large part of your monthly pay.

Can I still get gratuity if I resign?

In the UAE and Qatar, yes — resigning doesn’t reduce your gratuity under current law. In Saudi Arabia, resigning does reduce it on a sliding scale unless you’ve completed 10+ years of service (see the breakdown above).

What if I’ve worked less than a year?

You’re not entitled to gratuity yet in any of the three countries. The one-year minimum applies regardless of why you’re leaving.

Does unpaid leave affect my gratuity?

Yes, generally. Days taken as unpaid leave are typically excluded when calculating your total length of service, which can slightly reduce your final amount.

Is gratuity taxable?

No. None of the UAE, Saudi Arabia, or Qatar have personal income tax, so the full amount you’re owed is yours to keep.

Can my employer deduct anything from my gratuity?

In most cases, yes — for documented debts like unpaid loans or salary advances. What they generally cannot do is reduce it as a penalty outside of the legally defined misconduct cases in each country’s labour law.

Disclaimer

This calculator provides an estimate only, based on our understanding of UAE, Saudi Arabian, and Qatari labour law as it currently stands. It is not legal, financial, or tax advice, and it does not replace an official calculation from your employer’s HR department or your country’s labour ministry (MOHRE in the UAE, HRSD in Saudi Arabia, or the Ministry of Labour in Qatar).

Actual entitlements can vary based on your specific employment contract, free zone rules, company policy, unpaid leave records, outstanding deductions, and individual circumstances not captured by a general formula. Laws can also change — figures here reflect the rules at the time of writing and may not reflect the most recent amendments.

Before resigning, accepting a settlement, or making any financial decision based on this tool, we strongly recommend confirming your exact entitlement with your HR department, the relevant government authority, or a licensed labour lawyer in your country. ImmigrationCafe is not liable for any decisions made based on the estimates this calculator provides.