End of service gratuity in the UAE
How to Calculate Gratuity in UAE for Unlimited Contract: Old Rules vs What Applies Now
If you joined on an unlimited contract and you are leaving your job now, one question comes first: how to calculate gratuity in UAE for unlimited contract service when the rules changed years ago? The short answer is that the old unlimited contract rules ended on 2 February 2022, when Federal Decree-Law No. 33 of 2021 replaced the old labour law. Today there is one set of gratuity rules for full-time foreign workers in the federal private sector, and resignation no longer cuts the amount. This guide explains the old rules, what replaced them, how to check which rules your employer is using, and what to do if your settlement still carries an old reduction.
The short answer
Old rules vs what applies now, in one view
Under the old law, the words on your contract mattered a great deal. An unlimited contract and a limited contract carried different gratuity outcomes, and an employee who resigned could lose a large part of the gratuity. That is the system many workers still remember, and it is the system some employers still quote when they prepare a settlement. It is not the system that governs a settlement today.
Since 2 February 2022, the federal private sector has one set of gratuity rules in Article 51 of Federal Decree-Law No. 33 of 2021. The contract type no longer changes the amount, and the reason for leaving no longer changes it either. A worker with at least one year of continuous service gets the full Article 51 amount whether they resign or the employer ends the contract. If your settlement shows a reduction because you resigned, that reduction comes from the old law, and you should ask for the legal basis in writing before you accept it.
One point needs care. The old law was repealed on 2 February 2022. How pre-2022 service is treated in a settlement that ends now is fact-specific and disputed in guidance. Keep prior settlement statements, ask the employer for the legal basis of any split, and check with MOHRE or a lawyer before accepting a reduced figure. Do not sign a settlement you do not understand, and do not accept a verbal promise that the figure is correct. For the full worked calculation under the current rules, see our complete guide to end of service gratuity in the UAE.
Old rules vs current rules at a glance
| Point | Old law (before 2 Feb 2022) | Current law (Article 51) |
|---|---|---|
| Contract types | Limited and unlimited contracts, with different gratuity outcomes | One fixed-term contract model for all private sector workers |
| Resignation | Unlimited contract gratuity cut by service length, down to nothing under one year | Same amount as termination, no resignation reduction |
| Minimum service | Less than one year of service meant no gratuity on resignation | At least one year of continuous service qualifies |
| Rate basis | Article 132 rates, then reduced by the resignation tiers | 21 days basic wage for each of the first five years, then 30 days a year |
| Payment deadline | No fixed 14-day deadline in the old law | Within 14 days of the contract ending |
Old law refers to Federal Law No. 8 of 1980, repealed in full on 2 February 2022. Current law refers to Federal Decree-Law No. 33 of 2021. Last verified 5 Nov 2026.
The old law
The old unlimited contract rules, explained
The old rules sat in Article 137 of Federal Law No. 8 of 1980, and they applied only when an employee left at their own option, meaning they resigned. The reduction worked in steps tied to length of service. With less than one year of service, the employee got no gratuity at all. With one to three years, the employee got one-third of the gratuity set out in Article 132. With more than three years and less than five years, the employee got two-thirds. With more than five years, the employee got the full amount.
That cut applied to resignation only. If the employer ended an unlimited contract under the old law, the employee received the full Article 132 rates with no reduction. The gap between the two outcomes was large, and it shaped how people thought about leaving. A worker with four years of service who resigned took home two-thirds of the gratuity, while a colleague with the same four years who was terminated took home the full amount. Many workers delayed resigning, or negotiated an agreed ending, because the difference was worth real money.
Limited contracts were harsher still. Under Article 138 of the old law, an employee who resigned before the end of a limited contract got no gratuity at all, unless their service had passed five years. That rule is one reason the old contract label carried so much weight, and why workers asked at hiring time whether the offer was limited or unlimited. The label decided the gratuity outcome before a single day of work had passed.
If you hear different tiers quoted today, treat them with caution. Some versions floating around online say no gratuity under three years, one-third from three to five years, two-thirds from five to ten, and full gratuity only after ten years. Those figures are wrong. The correct old tiers are the ones above: nothing under one year, one-third from one to three years, two-thirds from more than three to less than five years, and full gratuity after five years. A settlement built on the wrong tiers will underpay you, so check any figure against the tiers in this section.
The change
Why the old rules ended on 2 February 2022
Federal Decree-Law No. 33 of 2021 came into force on 2 February 2022, replacing Federal Law No. 8 of 1980, which was repealed in full. The new law was a fresh start rather than a small edit, and it removed the limited and unlimited contract distinction altogether. All private sector contracts are now fixed-term contracts, renewable by agreement between the employer and the employee. There is no unlimited contract to sign any more, and no limited contract either, only a fixed-term contract with a stated end date that both sides can renew.
Legacy unlimited contracts did not vanish overnight. Employers were given time to convert existing unlimited contracts into fixed-term contracts, and the conversion deadline was 31 December 2023, extended by Ministerial Resolution No. 27 of 2023. If you signed an unlimited contract before February 2022 and you still work for the same employer, your contract should have been converted by that date. If it was never converted on paper, that does not revive the old gratuity tiers. The old law is repealed, and the current law is the one that sets your gratuity.
One detail trips people up. The original version of Decree-Law No. 33 of 2021 capped fixed-term contracts at three years. That cap was later removed by Federal Decree-Law No. 14 of 2022, so do not rely on a three-year maximum as current law. A fixed-term contract today can run longer where the parties agree, and the length of the term does not change the gratuity rate. What matters for gratuity is your total continuous service and your last basic wage, not the length written on any single contract term.
The current rules
How to calculate gratuity in UAE for unlimited contract now
The question most people ask is how to calculate gratuity in UAE for unlimited contract service under the rules that apply now. The answer is simpler than the old system, because there is only one calculation and it does not change with the reason for leaving. A full-time foreign worker in the federal private sector with at least one year of continuous service qualifies. For each of the first five years, the rate is 21 days of basic wage. From year six onward, the rate rises to 30 days of basic wage per year. The amount is worked out pro rata for part years, on the last basic wage only, with allowances left out, and unpaid absence does not count. The total is capped at two years of wage.
That short summary is the whole current rule in outline, and this guide deliberately stops there. A worked example with real salary figures, the pro rata maths and the common mistakes belong in one place so they stay consistent, and that place is our complete guide to end of service gratuity in the UAE. If you want a figure for your own salary, run it through our gratuity calculator for the UAE, which applies the Article 51 rates to the basic wage and service length you enter. The one thing to check before you trust any figure, from a calculator or from your employer, is the basic wage it uses: the calculation runs on basic wage only, so allowances, housing, transport and commission must stay out of it.
The payment deadline is part of the current rule too. Article 53 requires the employer to pay gratuity and all other end of service dues within 14 days of the contract ending. That deadline covers the full settlement, not only the gratuity line, so late payment of any part of the settlement is late payment of the whole. Keep the date your contract ended, and count 14 days from there.
Check your settlement
How to check which rules your employer is applying
Most underpayments are easy to spot once you know what to look for, because an old-rule settlement leaves clear marks. Start with the settlement statement itself and read it line by line before you sign anything. A correct current settlement shows the full Article 51 amount with no separate deduction line. A settlement still built on the old rules usually shows one of three marks: a line that says one-third or two-thirds, a note that the amount is reduced because you resigned, or a total that matches the old tiers rather than the full Article 51 amount.
Next, check the basic wage on the statement against your contract and your recent payslips. The gratuity must be worked out on your last basic wage, so a statement that uses an older, lower basic wage, or one that folds allowances into the wage and then applies a different rate, will give the wrong total. Your salary records also matter here: if your pay runs through the Wages Protection System, your WPS records show what was actually paid each month, and they give you a solid base to compare against the settlement figure.
Then check the service dates. Count your continuous service from your joining date to your last working day, and confirm the statement uses the same dates. A common error is a start date that begins months after you actually joined, which quietly cuts the service length and the gratuity with it. Unpaid absence is the only period the law excludes, so ask for the dates of any unpaid absence the employer has deducted, and check them against your own leave records.
Ask the employer, in writing, for three things: the full Article 51 amount with the working shown, the legal basis for any reduction or split, and the date the payment will reach you. A written request protects you in two ways. It gives the employer a fair chance to correct an honest mistake, and it creates a dated record if the matter later goes to MOHRE. Keep copies of your contract, your payslips, the settlement statement and every message about the payment, because those papers are what a complaint is built on.
If the figure is wrong
What to do if your employer still applies an old reduction
If the settlement still carries an old resignation reduction, start with a written request to the employer for the full Article 51 amount. State the figure you expect, show the working from your last basic wage and your service length, and ask for the legal basis of any reduction in writing. Many cases end here, because the reduction is often a payroll habit left over from the old law rather than a deliberate decision, and a clear written request is enough for the employer to fix it.
If the employer refuses or does not reply, file a labour complaint with MOHRE, the Ministry of Human Resources and Emiratisation. You can file through the MOHRE website or app, or at a service centre, and you can also reach MOHRE Labour Claims on 80084 as one channel. Attach your contract, your payslips, the settlement statement and your written request, so the complaint starts with the full picture. MOHRE mediates the dispute first, and it can decide claims up to AED 50,000. Larger unsettled claims go to the Labour Court.
Two timing points matter. First, labour claims must be brought within two years of the right becoming due, under Article 54 as amended in 2024. The old one-year limit is outdated, so do not let anyone tell you that a year has passed and the claim is gone. Second, the 14-day payment deadline runs from the end of the contract, so the clock on the payment starts before any complaint. If you work in a free zone, file first with the free zone mediation department, which handles the first stage for free zone employees.
Do not sign a final settlement or a clearance paper that states a reduced figure while a dispute is open, because a signed acceptance can weaken the complaint. If the employer asks you to sign before payment, ask for the full working in writing first, and take advice before you sign. A short delay to get the figure right is far cheaper than accepting a cut that runs into thousands of dirhams.
Scope
Who the current rules cover, and who they do not
Article 51 covers full-time foreign workers in the federal private sector, and that scope has edges worth knowing. DIFC and ADGM run their own employment regimes, so workers in those financial free zones follow different end of service rules, and a DIFC or ADGM settlement will not match an Article 51 figure. Domestic workers and government employees sit outside Decree-Law No. 33 of 2021 altogether, and Emirati workers fall under pension law rather than Article 51 gratuity. If you sit in one of those groups, the advice in this guide still helps you ask the right questions, but the figures come from your own regime, not from Article 51.
Part-time and flexible workers also need a separate check, because their gratuity is worked out on their own rules under the same law. If your contract is not a standard full-time contract, ask your employer for the basis of the calculation in writing, and compare it with the part-time rules before you accept the figure. The principle stays the same in every case: the employer should be able to show the working, name the legal basis, and pay within 14 days.
Examples
Two examples that show the difference
Take an accounts executive in Dubai who joined on an unlimited contract in 2019 and resigns in 2026 with seven years of service. Under the old tiers, her resignation would have paid the full Article 132 amount, because her service had passed five years, so the old and new figures would have looked close for her. The change matters far more for a colleague who leaves earlier. A sales supervisor with four years of service who resigned under the old law took two-thirds of the gratuity, because four years fell in the more than three to less than five band. Today that same supervisor gets the full Article 51 amount on resignation, with no two-thirds cut at all. The difference between two-thirds and full is the amount the old law took away, and it is the amount to look for in a settlement that still uses the old tiers.
Take a second case: a warehouse assistant in Sharjah who joined in 2021 on an unlimited contract and resigns in 2026 with five years of service. Under the old tiers, a resignation at just over five years paid the full amount, while a resignation a few months earlier, at four years and ten months, would have paid only two-thirds. That cliff edge was one of the harshest features of the old system, because a few weeks of service could change the payout by a third. The current law has no cliff edge and no resignation cut, so the same assistant gets the full Article 51 amount whenever they leave after the first year. If a settlement for either of these workers shows a one-third or two-thirds line, it is using repealed law.
For employers
Getting the final settlement right
The old tiers still appear in settlements for a simple reason: payroll habits change more slowly than the law. Many employers updated their contracts in 2022 and 2023 but never updated the gratuity formula in their payroll system, so the old resignation cut keeps running quietly in the background. If you run payroll for your business, check the formula itself, not only the contract template, and test it against one resignation case before the next employee leaves. Our payroll services in the UAE include final settlements, gratuity and WPS, so the last payslip and the gratuity line are worked out together and the 14-day deadline is met. We provide all services ourselves and with our licensed partners, and a Free Finance Review is the quickest way to check whether your payroll still carries an old gratuity rule.
Frequently asked questions
Unlimited contract gratuity: questions, answered
Did unlimited contracts still exist in the UAE after 2 February 2022?
No. Federal Decree-Law No. 33 of 2021 came into force on 2 February 2022 and abolished the limited and unlimited contract distinction. All private sector contracts are now fixed-term contracts, renewable by agreement. Legacy unlimited contracts had to convert by 31 December 2023, extended by Ministerial Resolution No. 27 of 2023.
How much gratuity do I get if I resign from an unlimited contract now?
You get the full Article 51 amount, the same as if the employer had ended the contract. There is no resignation reduction now. A full-time foreign private sector worker with at least one year of continuous service gets 21 days of basic pay for each of the first five years, and 30 days for each year after that, worked out pro rata on the last basic wage only and capped at two years of wage.
How to calculate gratuity in UAE for unlimited contract service before 2022?
The old law was repealed on 2 February 2022. How pre-2022 service is treated in a settlement that ends now is fact-specific and disputed in guidance. Keep prior settlement statements, ask the employer for the legal basis of any split, and check with MOHRE or a lawyer before accepting a reduced figure.
Can my employer still cut my gratuity because I resigned?
No, not under the current law. Article 51 pays the same gratuity on resignation and on termination, with no resignation reduction. If your settlement shows a one-third or two-thirds cut because you resigned, ask the employer in writing for the full Article 51 amount and the legal basis for the cut.
How long does my employer have to pay my gratuity?
Your employer must pay gratuity and all other end of service dues within 14 days of the contract ending, under Article 53. The deadline covers the full settlement, not only the gratuity line.
What should I do if my employer pays less gratuity than Article 51 allows?
Ask the employer in writing for the full Article 51 amount, then file a labour complaint with MOHRE through its website or app or a service centre. MOHRE mediates and can decide claims up to AED 50,000, and larger unsettled claims go to the Labour Court. Labour claims must be brought within two years of the right becoming due. Free zone employees file first with the free zone mediation department.
Related guides
Keep reading: gratuity and final pay in the UAE
Free Finance Review
Check your gratuity before you sign
Bring your contract, your last payslip and your settlement statement to a Free Finance Review and we will check the figure against Article 51, line by line, before you accept it.