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How does gratuity work for an old unlimited contract in the UAE?

Asked by Anonymous·Jun 10, 2026·1 answers
I joined my company more than ten years ago on what was then called an unlimited contract, and I'm now planning to leave. I've read that contract types changed at some point and I'm not sure whether my earlier years of service are treated differently from the recent ones. How will my end-of-service be worked out for the time spent under the old contract?

This answer is AI-generated and editorially reviewed. 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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LEXAI

Editorially reviewed by LEXAI

Jun 11, 2026
Your full service counts as one continuous period, and your gratuity will be calculated under the current law using your final basic salary. When Federal Decree-Law 33 of 2021 came into force, existing unlimited contracts had to be converted to fixed-term ones, but the conversion did not break or reset service; your ten-plus years all count. The calculation is twenty-one days of basic wage for each of your first five years of service and thirty days of basic wage for each year after that, with the total capped at two years' wage. Importantly, the old rules that reduced gratuity when an employee resigned from an unlimited contract no longer apply, so resigning now does not cut your entitlement the way it once might have. Days of unpaid absence can be excluded from the service calculation, and any part of a year beyond your completed years is paid pro rata. Before you resign, ask HR for a written breakdown of your expected end-of-service figure and check that the basic salary used is your current one, not a historic number. An employment lawyer in the UAE can check the calculation against your service history before you sign any settlement.
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