UAE End-of-Service Gratuity — Explained with Worked Examples
How EOSB is calculated under UAE Federal Decree-Law No. 33 of 2021, the formula in plain language, and worked examples for the most common scenarios. Educational reference — not legal advice.
Formula per current UAE Labour Law · Worked examples · Educational
The UAE EOSB formula, in plain language
Under UAE Federal Decree-Law No. 33 of 2021, every employee who completes one or more years of continuous service is entitled to end-of-service gratuity (EOSB), paid at the end of the employment relationship. The formula uses basic salary (not total salary). For the first five years, the entitlement is 21 days’ basic salary per year. From year six onwards, it rises to 30 days’ basic salary per year. Total gratuity is capped at the equivalent of two years’ total salary. Partial years are pro-rated. This page walks through the rule and shows worked examples; CampusTrack automates the calculation inside the offboarding workflow.
The core formula
Per year of service: 21 days’ basic salary for years 1–5, then 30 days’ basic salary for each year thereafter. Total capped at two years’ total salary. Basic salary excludes housing, transport, and other allowances.
Example 1 — short tenure (2 years, AED 8,000 basic)
2 years × 21 days × (8,000 ÷ 30) = 2 × 21 × 266.67 ≈ AED 11,200. Paid in full at end of employment subject to the contract type and end-of-employment reason.
Example 2 — long tenure (10 years, AED 12,000 basic)
First 5 years: 5 × 21 days × (12,000 ÷ 30) = AED 42,000. Next 5 years: 5 × 30 days × (12,000 ÷ 30) = AED 60,000. Total: AED 102,000.
Example 3 — partial year (3.5 years, AED 10,000 basic)
3 years × 21 days × (10,000 ÷ 30) = AED 21,000. Plus 0.5 year (6 months): 0.5 × 21 days × (10,000 ÷ 30) = AED 3,500. Total: AED 24,500.
Example 4 — probation termination
No gratuity is payable for the probation period if the employee is terminated during probation. The probation rule does not apply if the employee completes probation and then leaves later.
Example 5 — contract end vs early termination
New UAE Labour Law (2021) simplified contract structures. End-of-contract and mutual early termination are typically treated similarly for gratuity; specific scenarios (employer-initiated dismissal for cause) can affect entitlement. Confirm specifics with qualified counsel.
The two-year cap
Regardless of tenure, total gratuity cannot exceed the equivalent of two years’ total salary. For long-tenure senior staff with high salaries, this cap is the binding constraint.
When CampusTrack runs the calculation automatically
Inside the offboarding workflow, EOSB is computed automatically with every assumption shown: basic salary, service years, partial-year months, contract type, and end-of-employment reason. HR confirms before the settlement PDF is generated.
Walking through the formula step by step
Determine basic salary
Use basic salary only — not total salary. Housing, transport, and other allowances are excluded. If the contract is unclear on the basic split, confirm with the signed letter of employment.
Calculate completed years of service
Count full years from start date. Any service less than one year does not qualify for EOSB. Partial years above one are pro-rated.
Apply the per-year multiplier
Years 1–5: 21 days’ basic salary each. Years 6 onwards: 30 days’ basic salary each. A 30-day month is the standard convention.
Add partial-year pro-rata
For the partial year above the last full year, multiply (months ÷ 12) by the applicable per-year amount. Example: 0.5 year in the “21-day” band = half of one 21-day year.
Apply the two-year total-salary cap
If the running total exceeds two years’ total salary (basic + allowances), cap it there. This is the binding constraint for very long-tenure senior staff.
Built around UAE compliance, not adapted to it
UAE Federal Decree-Law No. 33 of 2021
The current governing labour law for private-sector employment in the UAE. EOSB rules are set out in this law and its executive regulations. CampusTrack’s calculator implements the current formula and applies probation, contract-end, and termination scenarios per the law.
Basic salary, not total salary
The most common mistake is using total salary (basic + allowances) in the EOSB calculation. Only basic salary applies. The two-year cap at the end is on TOTAL salary, but the per-year multiplier is on BASIC salary.
Limited vs unlimited contracts
The 2021 law simplified the previous distinction between limited and unlimited contracts. Most scenarios now follow the same EOSB formula; some edge cases (early employer-initiated termination for cause) can still affect entitlement. Confirm with qualified counsel for specific cases.
Educational reference — not legal advice
This page is for informational purposes only and is not legal, payroll, or compliance advice. Specific employment cases — particularly disputed terminations — should be reviewed with qualified legal counsel. CampusTrack’s calculator implements the standard formula and is intended as a starting point, not as a substitute for case-specific review.
Frequently asked questions
How long do I have to serve to qualify for EOSB?▾
What if I resigned versus was terminated?▾
Does the calculator handle probation termination?▾
How are bonuses, commissions, and overtime treated?▾
What if my basic salary changed during employment?▾
Can CampusTrack run this calculation automatically?▾
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Read more →Run a real EOSB scenario in your demo
Bring an anonymised case (start date, end date, basic salary, contract type) and we will walk it through the calculator live. You will see every assumption, the worked formula, and the settlement PDF.