Employee Rights Upon Termination of Employment in the UAE: What You Need to Know About End-of-Service Gratuity

Mohamed Al-Raai
Legal Researcher at Zayed Al Shamsi Advocates and Legal Consultants.

Understanding one’s legal rights is essential for any full-time employee working in the United Arab Emirates, especially when the employment relationship comes to an end—whether due to resignation or the expiration of the employment contract. Among the most important of these rights is the End-of-Service Gratuity, which is a financial payment granted in recognition of the employee’s service period with the company.

What is End-of-Service Gratuity?

The End-of-Service Gratuity is a lump sum payment owed to an employee at the end of their employment, provided that the employee has completed at least one full year of continuous service. The gratuity is calculated based on the basic salary only, and does not include allowances such as housing, transportation, or others.

How is the Gratuity Calculated?

According to UAE Labour Law, the calculation of the gratuity follows a clearly defined structure:

• For each of the first five years of service: The employee is entitled to 21 days of basic salary per year of service.
• For each year beyond the first five years: The employee is entitled to 30 days of basic salary per additional year.

However, the total gratuity must not exceed the equivalent of two years’ worth of basic salary.

Conditions for Eligibility

To qualify for the End-of-Service Gratuity, the following conditions must be met:

• The employee must have completed at least one full year of continuous service.
• The employer has the right to deduct from the gratuity any amounts legally due or determined by court order, in accordance with the procedures and conditions outlined in the Executive Regulations (Cabinet Resolution No. 1 of 2022) issued under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations.

Key Takeaways for Employees in the Private Sector

It is vital for any employee in the UAE private sector to be well-informed of their rights before ending an employment contract, whether voluntarily or involuntarily. Employees should:

• Carefully review their employment contract and understand its terms.
• Seek legal advice in complex situations.
• Ensure they claim all their legal entitlements, particularly the End-of-Service Gratuity.

Taking these steps can help ensure that employees leave their jobs with all the benefits they are legally entitled to.