OnlineCalculatorWhy the split exists
A UAE employment package is almost never a single number. It is typically broken into a basic salary plus allowances — housing, transport, sometimes education or mobile. The total is what you negotiate and what lands in your account each month. But the basic component is what the law uses for almost every entitlement you accrue.
A common structure puts basic at 50% to 60% of the total package. There is no statutory minimum ratio for private-sector employees, which means the split is a matter of contract, and it is negotiable.
What is calculated on basic salary alone
- End-of-service gratuity — 21 days of basic pay per year for the first five years, 30 days per year thereafter
- Annual leave salary — untaken leave days converted to cash at the basic rate
- Notice period pay — where payment is made in lieu of serving notice
Allowances are excluded from all of these. So is commission, and so are bonuses.
What that costs in practice
Take two employees, both on AED 20,000 per month, both leaving after five years.
Employee A has basic set at AED 12,000. Their daily wage is AED 400, and five years accrues 105 days: AED 42,000.
Employee B has basic set at AED 7,000. Their daily wage is AED 233, and the same five years accrues the same 105 days: AED 24,500.
Identical take-home pay for five years. A difference of AED 17,500 on the way out — and the gap widens the longer you stay, because service beyond five years accrues at the higher 30-day rate.
What changed in 2022
Federal Decree-Law No. 33 of 2021 came into force in February 2022 and abolished unlimited-term contracts. Every private-sector employee is now on a fixed-term contract. The practical consequence: the old sliding scale that cut an employee's gratuity to one third or two thirds if they resigned before five years no longer applies. If you resign today, you keep your full entitlement.
Many gratuity calculators still online were built before this change and quietly understate what you are owed. Ours applies the current rules — check yours with the end of service calculator.
Free zones are different
DIFC and ADGM operate their own employment regimes. DIFC in particular replaced the lump-sum gratuity with the DEWS savings scheme, where the employer contributes monthly to a funded plan rather than paying out at the end. If your visa is sponsored by a free-zone authority, check which rules apply to you before assuming the federal formula.