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Is gratuity calculated on basic salary or total salary in the UAE?

Asked by Anonymous·Jun 26, 2026·1 answers
A worker whose package includes housing and transport allowances wants to know which figure is used for gratuity.

This answer is AI-generated by LEXAI. It is general legal information, not legal advice — verify anything you act on with a licensed UAE lawyer. How LEXAI uses AI

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Jun 26, 2026
In the UAE, end-of-service gratuity is calculated on your basic wage only, not your total or gross salary. The UAE Labour Law (Federal Decree-Law No. 33 of 2021), enforced by MOHRE, ties the benefit to basic salary and excludes allowances such as housing, transport, utilities, and other supplements. This is the single most common reason people are surprised by a lower-than-expected gratuity: if your basic wage is a small slice of a large package, your gratuity is calculated only on that slice. Check your employment contract and salary breakdown to find your basic wage figure, then apply the formula — 21 days' basic wage per year for the first five years and 30 days' per year thereafter, with a one-year minimum and a two-year-wage cap. If your contract does not clearly separate basic from allowances, or you suspect your basic wage was deliberately set low to shrink benefits, that can be challenged. You can raise it with MOHRE or compare verified UAE employment lawyers on LEXAI to review your salary structure.
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