General

End-of-service gratuity explained — every expat should know this

7 June 2026·4 min read

A driver in Sharjah worked 14 years for one company and was handed a gratuity cheque for 22,000 AED. A friend later ran the math, by UAE law he was owed closer to 38,000. The company had calculated wrongly, using basic only and excluding allowances his contract treated as basic. He filed a MOHRE complaint and won. Gratuity is one of your most important rights as a Gulf expat, and one of the most commonly underpaid. Knowing the rules protects years of your work.

What the gratuity actually is.

End-of-service gratuity, sometimes called severance or EOSB, is a lump sum payment owed by your employer at the end of employment, based on your years of service and basic salary. It is mandatory under labour law across all six GCC countries. Not a bonus, a legal right.

The UAE calculation.

Under UAE Federal Labour Law, you accrue 21 days of basic salary per year for the first 5 years, then 30 days per year from year 6 onwards. Basic excludes allowances. Cap is 2 years of basic. Example, if your basic is 6,000 AED and you served 8 years, gratuity is (5 x 21 x 200) plus (3 x 30 x 200) which equals 39,000 AED.

The Saudi calculation.

Under Saudi Labour Law, half a month's salary per year for the first 5 years, then a full month per year from year 6. The calculation uses last drawn wage and treatment of allowances varies, so check carefully. Saudi is moving toward a Savings System for gratuity, rollout is gradual.

The Qatar calculation. Under Qatar Labour Law, you get 3 weeks of basic salary per year of service, paid at the end. No graduated scale. Minimum 1 year of service to qualify.

Kuwait, Oman, and Bahrain. Kuwait, 15 days per year for first 5 years, then 1 month per year, capped at 1.5 years wage. Oman, 1 month per year for first 3 years, then 1.5 months per year. Bahrain, 15 days per year for first 3 years, then 1 month per year.

The critical detail, what counts as basic.

In most Gulf jurisdictions, gratuity is calculated on basic salary, not total package. Employers often structure salaries with a low basic and high allowances precisely to minimise gratuity liability. This is technically legal but quietly costs you tens of thousands over a long career. Always read your contract to see the basic split. If your total is 10,000 AED but basic is only 4,000 AED with 6,000 in allowances, your gratuity is calculated only on 4,000, not 10,000.

Resignation vs termination. Under the new UAE law since 2022, gratuity is generally fully payable regardless of whether you resigned or were terminated, provided you completed at least 1 year. Saudi and Qatar have similar protections. Always check the latest rules for your situation.

When you do not get gratuity. If you served less than 1 year, you do not qualify. Termination for gross misconduct under specific labour law clauses can forfeit gratuity. Abandoning employment without notice can lose entitlement. Most other scenarios still qualify.

When and how it is paid. Gratuity is paid in your final settlement, alongside unused leave, last salary and notice dues. UAE law requires payment within 14 days of end of employment, similar windows elsewhere. If your employer delays beyond the statutory window, file a labour complaint.

Common mistakes employees make.

Not reading their contract to understand basic vs allowances. Accepting the employer's calculation without verifying. Not knowing that allowances treated as basic in the contract should be included. Not following up if gratuity is delayed beyond the statutory window.

How to verify your gratuity calculation. Free online calculators exist for each GCC country. MOHRE in UAE has one, Qiwa in Saudi has one. Run the calculation yourself before accepting the employer's number. If there is a gap, request a written breakdown.

Protect your gratuity during your service. Keep your contract, amendments, payslips and increment letters. They are your evidence in any dispute. If your employer restructures your salary to reduce basic, push back, it is a warning sign — and a moment to revisit our Gulf offer negotiation guide.

What to do if you are underpaid. Request a written breakdown from your employer. Then file a complaint with the labour ministry, MOHRE in UAE, HRSD in Saudi. Most cases resolve without court. Labour ministries are generally protective on gratuity because the calculations are clearly defined by law.

Finally, treat gratuity as part of your retirement planning.

For long-service expats, gratuity can be a year or more of salary, often funding your return home, kids' education, or business. Plan for it. Recent reforms in Saudi and UAE are moving toward portable, investment-linked savings systems that grow your benefit over time.

For more practical Gulf expat guides and live job listings across the UAE, Career Club is free to use anytime from the app home screen.