Most Gulf pay packages are split into a basic wage plus allowances: housing, transport, phone, sometimes a “social” or family allowance. On payday the split hardly matters. At the end of your contract it can matter a great deal, because the labour laws do not all calculate gratuity, leave pay and overtime on the same figure.
Which wage each country uses for gratuity
| Country | Wage used for gratuity | Law |
|---|---|---|
| UAE | Last basic wage; allowances excluded | Decree-Law 33/2021, Art. 51 |
| Saudi Arabia | Last actual wage: basic plus allowances | Labor Law, Art. 84 (wage defined in Art. 2) |
| Qatar | Last basic wage | Law 14/2004, Arts. 54 and 72 |
| Kuwait | Last full wage: basic plus regular allowances | Law 6/2010, Art. 55 |
| Oman | Last basic wage, which includes any periodic allowance | RD 53/2023, Arts. 1 and 61 |
| Bahrain | Last basic wage plus social allowance | Law 36/2012, Art. 47 |
So the countries fall into two groups. In the UAE and Qatar, only basic pay counts. In Saudi Arabia and Kuwait, allowances are included. Oman and Bahrain sit in between: Oman’s legal definition of basic wage includes the periodic allowance, and Bahrain adds the social allowance to basic.
A quick illustration
Take an employee earning 10,000 a month in total, of which 6,000 is basic and 4,000 is allowances.
- Under a basic-wage rule, gratuity is calculated on 6,000.
- Under a full-wage rule, it is calculated on 10,000.
Every day of gratuity is therefore worth two thirds more under the full-wage rule. Over a long career that difference compounds.
A few details worth knowing
Saudi Arabia. The Labor Law defines “wage” broadly, covering basic pay, allowances, commissions and in-kind benefits, and HRSD describes the award on the actual wage. Under Article 86, your contract may exclude commissions and similar variable pay. Some calculator websites use basic wage only for Saudi Arabia; that understates the award.
Kuwait. The “full wage” in Article 55 includes periodic allowances, commissions and cash benefits, but excludes the social and children’s allowances paid under Law 19/2000.
Qatar. For workers paid by piece rate, the basic wage is the average of the last three months.
Bahrain. Commission or piece-rate earners use the average of the last three months.
What about leave pay and overtime?
The wage used for leave and overtime is not always the same as the one used for gratuity.
| Country | Overtime is calculated on | Leave pay notes |
|---|---|---|
| UAE | Basic wage (Art. 19) | Unused leave at the end of service is paid on basic wage |
| Saudi Arabia | Full hourly wage plus 50% of the basic hourly wage (Art. 107) | Paid in advance (Art. 109) |
| Qatar | Basic wage (Art. 74) | 3 weeks, or 4 weeks from 5 years (Art. 79) |
| Kuwait | Full wage (Arts. 66–68) | 30 working days (Art. 70) |
| Oman | Basic wage (Art. 71) | Annual leave on full wage (Art. 78) |
| Bahrain | Wage (Art. 54) | 30 days, 2.5 days a month (Art. 58) |
Saudi overtime is the clearest example of two wages working together: you are paid your full hourly wage for the extra hour, plus a premium of half your basic hourly wage. That is why our Saudi overtime calculator asks for both figures.
Why your contract’s basic wage matters
In countries that use basic pay, the basic figure written into your contract, and registered with the ministry and the wage protection system, sets the value of your gratuity. A low basic with large allowances keeps monthly pay attractive but shrinks end-of-service benefits.
Before you sign or renew a contract:
- Find the basic wage in writing. It should be stated separately from each allowance.
- Check it matches what is registered. The registered figure is what a ministry will use if there is a dispute.
- Compare offers on end-of-service value, not just monthly pay. Two offers with the same total can lead to very different gratuities in the UAE or Qatar.
- Ask whether a raise goes to basic or to an allowance. In a basic-wage country, only the first increases your gratuity.
Even in Saudi Arabia and Kuwait, where allowances count, the contract still matters: Saudi contracts can exclude commissions, and Kuwait excludes the Law 19/2000 allowances.
Try it with your own numbers
Each of our calculators labels the wage it expects, so you can enter the right figure:
- UAE gratuity calculator: basic wage
- Saudi gratuity calculator: basic plus allowances
- Qatar gratuity calculator: basic wage
- Kuwait gratuity calculator: full wage
- Oman gratuity calculator: basic including periodic allowance
- Bahrain gratuity calculator: basic plus social allowance
For the full rules, see the country guides, for example the UAE labour law guide or the Saudi labour law guide.
Results are estimates based on the statutory minimums, not legal advice. Your contract or company policy may give you more.