The UAE Ministry of Human Resources and Emiratisation (MOHRE) has outlined the legal framework governing end-of-service gratuity for expatriate employees in the private sector, highlighting four key elements that determine workers’ financial entitlements upon termination of employment. The framework also establishes a mandatory deadline for employers to settle outstanding wages and other contractual benefits.

Under UAE labour legislation, foreign full-time employees who complete at least one year of continuous service are entitled to an end-of-service gratuity calculated on their last basic salary. The entitlement equals 21 days of basic pay for each of the first five years of service and 30 days of basic pay for every additional year beyond that period, subject to applicable legal conditions.

Employees who have completed the minimum qualifying period are also entitled to proportional gratuity payments for fractions of a year. Unpaid absences are excluded from the qualifying service period, while the total gratuity must not exceed the equivalent of two years’ wages. The calculation is based on basic salary rather than the overall compensation package, meaning housing, transportation and other excluded allowances are not included.

The legislation further requires employers to settle all outstanding wages, end-of-service gratuity and other applicable entitlements within 14 days following the termination of the employment contract. This requirement, established under Article 53 of the UAE Labour Law, provides a clear legal timeframe for the settlement of employees’ financial rights.

Alongside the traditional gratuity framework, the UAE offers an optional alternative known as the Savings Scheme. Under this arrangement, participating employers make monthly contributions to approved investment funds on behalf of enrolled employees. At the end of their employment, beneficiaries become entitled to the basic contributions allocated to them and any investment returns generated under the scheme.

The alternative system is designed to strengthen financial protection, support long-term savings and improve the attractiveness of the UAE labour market. Eligible employees may also make additional voluntary contributions within prescribed limits, while employers retain the option to participate and enrol employees in accordance with the applicable regulations.

MOHRE’s guidance distinguishes between expatriate workers covered by the private-sector gratuity provisions and UAE nationals, whose end-of-service and retirement benefits are governed by the relevant pension and social security legislation. Employees seeking clarification about their entitlements or wishing to raise a labour complaint can use the ministry’s official service channels.

Source: UAE Ministry of Human Resources and Emiratisation and the Official UAE Government Portal