The UAE’s private-sector employment rules are set by Federal Decree-Law No. 33 of 2021, in force since 2 February 2022, together with its implementing regulation, Cabinet Resolution No. 1 of 2022. The 2021 law replaced the old Law No. 8 of 1980 and changed several rules that many websites still describe the old way. This guide covers what matters most when you join, work and leave. Figures here are estimates for information, not legal advice.
Who the law covers
The law applies to employees in the private sector and in the free zones (except where a free zone has its own employment rules). For end-of-service gratuity it matters whether you are a UAE national: UAE nationals are covered by the pension law (GPSSA) instead, so the gratuity described below applies to non-national employees.
End-of-service gratuity
Gratuity is set by Article 51.
- Wage used: your last basic wage. Housing, transport and other allowances, and benefits in kind, are not included.
- Minimum service: 1 year of continuous service. Under one year, no gratuity is due.
- Formula: 21 days’ basic wage for each of the first five years, then 30 days’ basic wage for each year after that. Part years after the first year are paid pro rata.
- Cap: total gratuity cannot exceed two years’ wage. Sources differ on whether this means two years of basic wage (the common reading, used by our calculator) or total wage.
- Unpaid absence: days of unpaid leave or absence are not counted as service.
- Day’s wage: the law does not set a divisor. MOHRE practice, which our calculator follows, is basic ÷ 30. Some calculators use basic × 12 ÷ 365, which gives a slightly lower day rate.
| Years of service | Gratuity per year |
|---|---|
| Less than 1 | Nothing |
| Years 1–5 | 21 days’ basic wage |
| Each year after 5 | 30 days’ basic wage |
| Maximum total | 2 years’ wage |
Resignation and dismissal
Under the old 1980 law, resigning cut your gratuity by a third or two thirds. That reduction no longer exists. Under the 2021 law you receive the full amount whether you resign or the employer ends the contract, as long as you have at least one year of service.
The 2021 law also does not take gratuity away when you are dismissed without notice under Article 44 (serious misconduct). Several payroll sites still say otherwise; that is based on the old law. The employer may, however, deduct amounts you genuinely owe.
Gratuity, with other final dues, must be paid within 14 days of the contract ending (Article 53).
The voluntary savings scheme
Article 52 and Cabinet Resolution No. 96 of 2023 allow employers to join an alternative end-of-service savings scheme. It is voluntary for employers; once an employer enrols a category of staff, it is compulsory for them. The employer then pays monthly contributions (5.83% of basic wage under five years’ service, 8.33% from five years) into a fund instead of paying the Article 51 gratuity at the end. If your employer is enrolled, ask HR for your fund statement. MOHRE consulted on changes in 2025–26, but the scheme remains optional.
Annual leave
Under Article 29, after one year of service you are entitled to 30 calendar days of paid annual leave a year. Between six and twelve months of service you earn 2 days for each month. When the contract ends, unused leave is paid out, calculated on basic wage. Use the UAE leave salary calculator to value your balance.
Overtime
Article 19 sets overtime pay on the basic hourly wage:
- regular overtime: basic hourly wage + 25%;
- work between 10 pm and 4 am: + 50% (shift workers are excluded from this night rate);
- work on your rest day: a substitute day off or + 50%.
Overtime should not exceed two hours a day except in cases the law allows. The hourly wage is normally the monthly basic divided by 30 and then by your normal daily hours. Try the UAE overtime calculator.
Notice period
Article 43 requires notice of at least 30 days and no more than 90 days, as agreed in the contract. The same rule applies whether the employer or the employee ends the contract.
Worked example
An employee earns a basic wage of AED 8,000 a month and leaves after exactly 7 years.
- Day’s wage: 8,000 ÷ 30 = AED 266.67
- Years 1–5: 5 × 21 = 105 days
- Years 6–7: 2 × 30 = 60 days
- Total: 165 days × 266.67 = AED 44,000
The cap (24 × 8,000 = AED 192,000) is not reached, and the result is the same whether the employee resigned or was terminated. Try your own figures in the UAE gratuity calculator.
Common mistakes
- Using total salary. UAE gratuity is on basic wage only. Check the basic figure in your contract or MOHRE record.
- Applying old resignation cuts. The one-third and two-thirds reductions belong to the repealed 1980 law.
- Assuming dismissal forfeits gratuity. Under the 2021 law it does not.
- Forgetting unpaid absence. Long unpaid leave shortens your counted service.
- Ignoring the savings scheme. If your employer joined it, your end-of-service money sits in a fund, not in the Article 51 formula.