Gratuity Calculator in UAE and UAE Labour Law Working Hours: A Comprehensive 2025 Guide

Gratuity Calculator in UAE and UAE Labour Law Working Hours: A 2025 Legal Guide

Estimated reading time: 12 minutes

Key Takeaways

• Federal Decree Law No. 33 of 2021 Regarding the Regulation of Employment Relationships, as amended by Federal Decree-Law No. 14 of 2022 and Federal Decree-Law No. 20 of 2023, governs end-of-service gratuity and working hours in the UAE private sector.
• Employees become eligible for end-of-service gratuity after 1 year of continuous service, with days of unpaid absence excluded from the period of service.
• Gratuity is calculated at 21 days’ basic salary (years 1–5) and 30 days (after year 5), capped at two years’ salary.
• Overtime is payable at 125% of hourly wage (150% at night) and statutory breaks/rest periods apply.
• All private sector employment contracts must now be concluded on a fixed-term basis; the law no longer imposes a statutory maximum duration for the fixed term, and employers may deduct any amounts lawfully owed by the employee from the end-of-service gratuity before payment.

Introduction: Gratuity Calculator in UAE and UAE Labour Law Working Hours

In the dynamic and progressive legal landscape of the United Arab Emirates, adherence to the most recent and rigorously enforced employment laws is not merely a formality but a necessity for safeguarding both employer and employee rights. As of 2025, employment relations in the private sector are governed by Federal Decree-Law No. 33 of 2021 Regarding the Regulation of Employment Relationships, as amended by Federal Decree-Law No. 20 of 2023 and Federal Decree-Law No. 9 of 2024, together with the Executive Regulations and subsequent Cabinet and Ministerial decisions. This foundational law governs not only the calculation of end-of-service gratuity but also the intricate framework for statutory working hours and associated entitlements.

This comprehensive legal analysis will explore in depth the structure, nuances, and authoritative protocols surrounding the gratuity calculator in the UAE, juxtaposed with a detailed overview of working hours as regulated under the prevailing UAE labour law reforms. Drawing from official sources including the Ministry of Human Resources and Emiratisation (MoHRE) and reputable industry analyses, this post aims to provide invaluable insights for professionals, legal consultants, HR managers, and expatriate employees navigating the current employment law environment. All legal references herein are cross-verified against official federal and ministerial portals, including the consolidated text of Federal Decree-Law No. 33 of 2021 and its amendments, and are valid as of November 17, 2025.

The Evolution of the UAE Gratuity Framework: Legal Basis and 2025 Compliance

The Governing Law: Federal Decree Law No. 33 of 2021

The cornerstone of end-of-service benefits and working hours for UAE private sector employees is established under Federal Decree Law No. 33 of 2021. This decree, inclusive of subsequent amendments, continues to serve as the authoritative statute for the calculation of gratuity and regulation of standard working conditions across the mainland and the majority of free zones in the United Arab Emirates, subject to specified exceptions for certain financial free zones such as the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), which apply their own employment regulations.

End-of-Service Gratuity: Eligibility, Scope, and Calculation (2025)

Eligibility and Minimum Tenure

Eligibility for end-of-service gratuity extends to private sector employees, excluding those under DIFC and ADGM frameworks. Employees must complete a minimum of one year of uninterrupted service, with any periods of unpaid leave or sabbaticals excluded from the service calculation.

Updated Gratuity Calculation (2025): Formulae and Statutory Capping

For 1 to 5 Years of Service

Employees completing between one and five years of service are entitled to 21 calendar days’ basic salary per year. The calculation is based on the final basic salary, excluding allowances and bonuses.

For Service Exceeding 5 Years

Beyond five years, the gratuity increases to 30 calendar days’ basic salary for each additional year served.

Cap on Total Gratuity

The total gratuity payout is capped at two years’ total salary.

Resignation versus Termination

The calculation method is uniform for both resignation and termination, and accrued end-of-service gratuity remains payable even in cases of summary dismissal for cause under Article 44, provided that the employee satisfies the statutory eligibility conditions.

Fixed-Term Contracts: Mandatory Replacement

All private sector employment contracts must be concluded for a definite (fixed) term and may be renewed by agreement between the parties. Unlimited-term contracts under the former Federal Law No. 8 of 1980 are no longer lawful and should have been converted within the statutory transition period prescribed by the Ministry of Human Resources and Emiratisation (employment contract guide).

Employer’s Right to Deductions

Employers may deduct any outstanding debts or advances from the gratuity before disbursement.

Official Step-by-Step Gratuity Calculation Method

1. Compute the Basic Daily Wage: Divide the basic monthly salary by 30.
2. Calculate Gratuity for Years 1–5: Daily wage × 21 × number of years (up to five).
3. Additional Gratuity for Each Year Beyond 5: Daily wage × 30 × number of years beyond five.
4. Aggregate the Amounts: Sum the results of both calculations to determine total entitlement.

Illustrative Example: For a basic salary of AED 10,000 and seven years of service: daily wage AED 333.33; first five years gratuity AED 35,000; years six and seven AED 20,000; total AED 55,000.

Automated Gratuity Calculators: Ensuring Accuracy and Compliance

To guarantee processing accuracy and legal compliance, rely on government-endorsed and trusted private platforms:

• Gulf News Gratuity Calculator
• Dubai Development Authority Calculator

Note: Confirm laws are up to date via the official MoHRE portal.

Working Hours Under UAE Labour Law (2025): Statutory Guidelines and Overtime Entitlements

Core Working Hour Requirements

Federal Decree Law No. 33 of 2021 mandates a maximum of eight working hours per day and 48 per week, with a two-hour daily reduction during Ramadan (MoHRE).

Overtime Regulation and Compensation

Hours beyond statutory limits are compensated at:

• 125% of the basic hourly wage for standard overtime.
• 150% for night overtime (10pm–4am).

Mandatory Breaks and Rest Periods

Employees are entitled to at least one unpaid break hour for every five consecutive working hours (MoHRE).

Exceptions and Special Roles

Certain managerial positions may have bespoke working time provisions as defined in executive regulations and employment contracts.

Cross-Verification and Best Practices: Protecting Your Rights in 2025

Always cross-check gratuity calculations using the Government of the UAE’s official portal and the Dubai Development Authority. In high-stakes scenarios, engage specialized law firms for full compliance and audit documentation.

Special Free Zone Regimes

Free zones such as the Dubai International Financial Centre (DIFC) require employers to make monthly contributions, typically between 5.83% and 8.33% of basic salary, into a qualifying workplace savings plan that replaces the statutory end-of-service gratuity, and practitioners must refer to the specific employment regulations of each free zone when advising on entitlements.

High-Impact Legal Keywords and Professional Considerations

Key terms—labour law, UAE gratuity law, gratuity calculator, UAE federal law—are essential for practitioners. Keep abreast of updates via the UAE labour law PDF guide and related financial regulations.

Conclusion

Strict adherence to Federal Decree Law No. 33 of 2021 and utilization of government-endorsed tools ensure fairness, predictability, and legal compliance. Regularly update employment contracts, leverage expert guidance for complex cases, and maintain audit-ready records to navigate the UAE’s dynamic labour landscape effectively.

Frequently Asked Questions

How is gratuity calculated for under five years of service?

Employees completing 1–5 years receive 21 days’ basic salary per year (basic monthly salary ÷ 30 × 21 × years served).

Does resignation affect gratuity entitlement?

No—resignation and termination yield the same calculation method unless gross misconduct is proven.

What are standard working hours and overtime rates?

Standard hours are 8 per day, 48 per week. Overtime is paid at 125% (standard) and 150% (night).

Are breaks mandatory under UAE Labour Law?

Yes—employees must receive one unpaid break hour for every five consecutive working hours.

Which online calculators are most reliable?

Use Gulf News and the Dubai Development Authority calculator.