Yes, UAE gratuity has a ceiling. Under Article 51 of Federal Decree-Law No. 33 of 2021, total end-of-service gratuity cannot exceed two years’ wage. Because gratuity builds at 21 days a year and then 30 days a year, someone paid on basic salary reaches the cap after roughly 25½ years. Beyond that point, additional years do not increase the payment.
You can check where you stand with the UAE gratuity calculator, which applies the cap automatically and tells you when it has been reached.
The cap: no more than two years’ wage
The official UAE government portal summarises the rule in one line: the total gratuity shall not exceed the wage of two years (u.ae, end-of-service benefits). Two years’ wage is the same as 24 months’ wage.
The cap matters only to long-serving employees. For most people, the formula produces a figure well below it.
How fast gratuity builds: 21 then 30 days a year
Gratuity is calculated on your last basic salary, with allowances excluded:
| Years of service | Gratuity earned per year | Running total (days of basic wage) |
|---|---|---|
| Under 1 | None | 0 |
| Years 1–5 | 21 days | 105 days after 5 years |
| Each year after 5 | 30 days | 405 after 15 years, 555 after 20 |
The day’s wage is your basic monthly salary divided by 30, the method MOHRE applies; the law itself does not fix a divisor.
After how many years you reach the cap
With the 30-day convention, 24 months of basic wage equals 720 days’ wage. Here is the arithmetic:
- The first five years earn 5 × 21 = 105 days.
- That leaves 720 − 105 = 615 days to reach the cap.
- At 30 days a year, that takes 615 ÷ 30 = 20.5 more years.
- Total: 5 + 20.5 = about 25½ years of service.
Some articles say “about 26 years”, which comes from treating the cap as 730 days. On the 30-day month used for the day’s wage, the cap is 720 days, so it arrives about six months earlier. Our calculator confirms this: 25 years of service is still below the cap, and 26 years hits it.
Basic or total salary for the cap?
This is the one point on which published sources genuinely disagree:
- u.ae says the gratuity may not exceed “the wage of two years” and that gratuity is based on basic salary, but it does not say which wage the cap uses.
- Some news explainers say the cap is two years of total salary.
- Some HR software guides say it is 24 months of basic salary.
Our calculator applies the cap to basic salary, which keeps the gratuity and its ceiling on the same wage. If the cap were measured on total salary instead, it would sit higher and few people would ever reach it.
For example, take a basic of AED 10,000 and a total of AED 16,000. The cap on total pay would be AED 384,000, which on basic-wage accrual would take almost 40 years to reach. Until MOHRE or the courts clarify the point, treat the cap’s wage basis as unsettled. For the wider basic-versus-total question, see basic or total salary.
Does the cap apply under the savings scheme?
Since 2023 the UAE has offered a voluntary alternative to the lump-sum gratuity. Under it, employers pay monthly contributions into an approved fund, and the employee receives the contributions plus any investment returns.
The u.ae portal describes that payout without mentioning the two-year cap, and we have not found an official statement that the cap applies. If your employer has enrolled you, check with the fund. Our article on what changed in Gulf end-of-service rules covers the scheme in more detail.
Examples at 10, 20, 25 and 30 years
All three examples use a last basic salary of AED 10,000, so the day’s wage is AED 333.33. Each person’s contract ends on 31 March 2026 after exactly the number of years shown.
| Service | Years 1–5 (21 days) | Years after 5 (30 days) | Before cap | Cap (24 × AED 10,000) | Gratuity |
|---|---|---|---|---|---|
| 10 years | AED 35,000 | AED 50,054.79 | AED 85,054.79 | AED 240,000 | AED 85,054.79 |
| 20 years | AED 35,000 | AED 150,136.99 | AED 185,136.99 | AED 240,000 | AED 185,136.99 |
| 25 years | AED 35,000 | AED 200,164.38 | AED 235,164.38 | AED 240,000 | AED 235,164.38 |
| 30 years | AED 35,000 | AED 250,191.78 | AED 285,191.78 | AED 240,000 | AED 240,000 (capped) |
The figures after year five include a few extra days because leap years make each period slightly longer than 365-day years. At 30 years the formula would give AED 285,191.78, but the cap holds the payment at AED 240,000.
Other points worth knowing
- The cap does not cover your other dues. Unused annual leave, outstanding salary and notice pay are paid separately. Use the UAE leave salary calculator for leave.
- Resigning does not reduce UAE gratuity once you have completed one year. See resigning vs being terminated for how the Gulf countries compare.
- Unpaid leave days are removed from service before the formula and the cap are applied.
- The full rules are in our UAE labour law guide.
Who actually reaches the cap?
Very few people. On basic-wage accrual you need more than 25 years with one employer, without long periods of unpaid leave, before the cap starts to bite. Service with a previous employer does not count towards it: gratuity is earned per employer and paid when each contract ends. Moving between companies under different contracts usually means each job is calculated separately.
The cap also interacts with salary growth. Gratuity is calculated on your last basic wage, so a promotion late in your career raises both the formula figure and the cap by the same proportion. The point at which you reach the cap, measured in years, stays at about 25½ years, whatever your salary.
How to check a capped settlement
If you have served more than 25 years and your settlement shows exactly 24 months’ basic wage, the employer has applied the cap. To check it:
- Multiply your last monthly basic wage by 24. That is the maximum.
- Work out the uncapped figure: 105 days’ basic wage for the first five years plus 30 days for each later year, with unpaid days removed.
- The gratuity is the lower of the two.
If your employer has used a smaller wage than your contract shows, or capped a figure that was not yet at the ceiling, ask for the working. For the full list of items your final settlement should include, see our final settlement checklist.
Calculate your gratuity
Enter your last basic salary and your service dates in the UAE gratuity calculator. It applies 21 days a year for the first five years, 30 days a year after that, removes any unpaid days, and caps the result at 24 months’ basic wage, flagging it when the cap applies. Results are estimates, not legal advice.
Frequently asked questions
Is there a maximum gratuity in the UAE?
Yes. Total gratuity under Article 51 of Federal Decree-Law 33 of 2021 cannot exceed two years' wage.
After how many years is UAE gratuity capped?
On basic salary with the usual 30-day month, the cap of 24 months equals 720 days' wage. You earn 105 days in the first five years and 30 days a year after, so you reach the cap after about 25.5 years.
Is the two-year cap based on basic or total salary?
The official u.ae portal says the gratuity may not exceed 'the wage of two years' without saying which wage. Gratuity itself is based on basic salary, and our calculator applies the cap to basic salary, but some sources say total salary. Treat this point as unsettled.
How much gratuity do I get after 20 years in the UAE?
On a basic salary of AED 10,000, 20 years of service gives about AED 185,137: AED 35,000 for the first five years plus 30 days' basic wage for each of the next 15 years.
Does the cap apply to the savings scheme?
The voluntary savings scheme pays your contributions plus investment returns, and we have not found an official statement that the two-year cap applies to it. Check with your fund provider.