UAE End of Service Gratuity: New Labour Law Formulas, 21 vs 30 Days Basic Pay & DIFC DEWS Schemes

account_balance UAE End of Service Gratuity (EOSB) under Federal Decree-Law No. 33 of 2021 on Labour Relations Photo: Royalty-Free Unsplash

In the United Arab Emirates (Dubai, Abu Dhabi, Sharjah, and Free Zones), private sector expatriate employees who complete at least one continuous year of service are legally entitled to End of Service Gratuity (EOSB). Under Federal Decree-Law No. 33 of 2021, unlimited contracts were replaced with fixed-term contracts, standardizing gratuity payouts regardless of whether you resign or are terminated.

1. The Statutory Gratuity Formula

Under Article 51 of the UAE Labour Law, gratuity is calculated strictly on the employee's last drawn basic salary:

• First 5 Years of Service: 21 days' basic salary for each completed year.
• Years Beyond 5 Years: 30 days' basic salary for each additional year.
• Partial Years: Calculated on a pro-rata basis (provided the employee has completed at least 1 full year).

2. Basic Salary vs Allowances

In the UAE, employment contracts split total compensation into Basic Salary and Allowances (Housing, Transport, Utilities):

3. The 2-Year Statutory Maximum Cap

By law, the total cumulative gratuity payout cannot exceed two years' worth of basic salary (24 times the last drawn monthly basic pay), regardless of how many decades the employee has worked for the company.

4. DIFC DEWS & UAE Alternative Savings Scheme

In the Dubai International Financial Centre (DIFC) and mainland companies participating in the Voluntary Alternative End-of-Service Benefits Scheme, employers deposit monthly cash into regulated investment funds:

• Years 1 to 5: Employer deposits 5.83% of monthly basic pay.
• Years 5+: Employer deposits 8.33% of monthly basic pay.
• Employees can select their investment risk profile (Sharia-compliant, global equities, or capital-guaranteed cash).

5. Worked Calculation (6 Years at AED 20,000 Basic Pay)