UAE Gratuity Calculator
✓ 2026 Labor Law Compliant
Exclude allowances. No minimum salary threshold.
The End of Unlimited Contracts in the UAE
If you are trying to calculate your end-of-service gratuity and wondering whether you hold a limited or unlimited contract, recent legal changes have simplified the answer. With the introduction of Federal Decree-Law No. 33 of 2021, which came into effect in February 2022, the UAE phased out unlimited contracts entirely. Today, all new private sector employment agreements must be fixed-term (limited) contracts, and employers were mandated to transition all existing legacy unlimited contracts into limited ones.
Under the previous labor law, the type of contract significantly impacted your gratuity, especially if you chose to resign. Employees on unlimited contracts who resigned before completing five years of service faced steep deductions—often receiving only a third or two-thirds of their rightful payout. With the universal transition to limited contracts, these punitive resignation penalties have been completely abolished.
How Your Gratuity is Calculated Now
Under the unified limited contract system, calculating your end-of-service benefits is straightforward. Regardless of whether you resign or are terminated (provided it is not for gross misconduct), you are entitled to your full gratuity as long as you have completed at least one year of continuous service.
The calculation is based strictly on your most recent basic salary, excluding allowances. For the first five years of service, you accrue 21 days of basic salary per year. For any service period beyond five years, you accrue 30 days of basic salary for each additional year. This unified approach ensures that all employees receive fair and equal treatment when concluding their employment in the UAE.
Frequently Asked Questions
Do unlimited contracts still exist in the UAE?▼
No, unlimited contracts are no longer issued for the private sector in the UAE. Under Federal Decree-Law No. 33 of 2021, all new contracts must be limited (fixed-term), and employers were legally required to convert legacy unlimited contracts into limited ones.
Will I lose gratuity if I resign from my limited contract?▼
No. Under the current UAE Labour Law, as long as you have completed at least one year of continuous service, there is no financial penalty or reduction in your gratuity payout if you choose to resign. You will receive your full 21 days or 30 days calculation based on your tenure.
What happens to my gratuity if my limited contract is renewed?▼
If your fixed-term contract is renewed upon expiry, your service is considered continuous. When calculating your final gratuity, the entire duration of your employment across all renewed contracts with the same employer is added together to determine your final payout.