If you work in the UAE or plan to take a job there, your salary is governed by one law: Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations. It decides how your end-of-service gratuity is calculated, how much notice you must give or receive, how many leave days you get, and what your employer owes you when the contract ends.
This guide breaks down the rules that directly affect your money, in plain terms.
How is end-of-service gratuity calculated in the UAE?
Gratuity is the lump sum your employer pays you when you leave a job after at least one year of continuous service. The formula is simple and fixed by law:
- First 5 years: 21 days of your basic salary for each year of service
- After 5 years: 30 days of your basic salary for each year of service
- Part-years: calculated pro-rata (a fraction of a year counts)
- Daily wage: your basic salary divided by 30
- Cap: the total cannot exceed 2 years of your basic salary
Two things people get wrong most often: gratuity is computed on your basic salary only, not your gross salary with allowances. And if you leave before completing one full year, you are entitled to nothing.
Worked example. You earned a basic salary of AED 10,000 and completed 5 years:
Daily wage = 10,000 ÷ 30 = AED 333.33
Gratuity = 333.33 × 21 days × 5 years = AED 35,000
After 7 years at the same basic salary, the calculation becomes 165 days (21 × 5 + 30 × 2), which is roughly AED 55,000.
Is gratuity different if I resign instead of being terminated?
No. Since Federal Decree-Law 33 of 2021 took effect in 2022, the same formula applies whether you resign or your employer terminates you. The old rule — under which resigning employees got reduced gratuity (one-third for 3–5 years of service) — was abolished. If you see that 1/3 table anywhere online, it is outdated and no longer law.
What is the Alternative End-of-Service Benefits (ESOB) scheme?
In 2023, the UAE introduced a voluntary savings scheme as an alternative to traditional gratuity (Cabinet Resolution 96 of 2023). Under this scheme, instead of paying gratuity at the end of your service, the employer contributes a percentage of your basic salary into an approved investment fund every month:
- 5.83% of basic salary for employees with less than 5 years of service
- 8.33% of basic salary for employees with more than 5 years of service
Contributions must be made within 15 days of the start of each month. Approved fund providers include Ghaf Benefits, Daman Investments, National Bonds, and First Abu Dhabi Bank. The scheme is voluntary for private-sector employers, so ask your employer whether they use the standard gratuity or the ESOB scheme — it changes how your end-of-service money is held.
When must gratuity be paid after my last working day?
Within 14 days of your final working day. Your employer must settle all end-of-service dues — gratuity plus any unpaid salary and leave balances — inside this window. If they miss the deadline, you can raise a complaint with the Ministry of Human Resources and Emiratisation (MOHRE).
How long can my probation period be?
A maximum of 6 months. The employer must notify you in writing if the probation period is set, and it can be served only once with the same employer (it restarts only if you take a genuinely different role).
During probation, either side can end the contract with 14 days’ written notice. One detail that catches people out: if you resign during probation to take a job with a different employer in the UAE, you must give at least 30 days’ written notice (one month), and your new employer must compensate your old employer for your recruitment costs unless you agree otherwise.
What is the notice period for resignation or termination in the UAE?
The notice period must be between 30 and 90 days, as written in your employment contract. Neither side can set it below 30 days or above 90 days. If your contract does not specify a period, the default is 30 days.
The party that ends the contract without serving the agreed notice must pay the other side compensation equal to the salary for the notice period not served.
How many annual leave days do I get?
30 calendar days of paid annual leave for each year of service, once you complete one year. Leave accrues during the first year too, but you generally take it after the year is complete.
Unused leave can be carried forward or paid out as a cash equivalent, depending on your employer’s policy and what your contract says. When leave is paid out, it is calculated on your basic salary.
What maternity and parental leave does UAE law provide?
- Maternity leave: 60 days — the first 45 days at full pay, the next 15 days at half pay
- Parental leave: 5 working days of paid leave for either parent, to be taken within the first 6 months after the child’s birth
A female employee is also entitled to nursing breaks after returning to work, and the law protects her from termination because of pregnancy or maternity leave.
What is the I’loe unemployment insurance scheme?
Since January 2023, most private-sector and federal government employees must subscribe to the Involuntary Loss of Employment (I’loe) insurance scheme. It is a low-cost mandatory insurance — not a tax — that pays you a monthly benefit for up to 3 months if you lose your job through no fault of your own.
Premiums depend on your salary band (AED 5 per month for basic salaries up to AED 16,000; AED 10 per month above that). Failing to subscribe on time results in fines, so register through the I’loe portal or your employer’s HR when you start work.
Is there a minimum wage in the UAE private sector?
There is no mandatory minimum wage for private-sector expatriate employees in the UAE. Unlike some countries, the law does not set a single floor that all employers must pay. Your salary is whatever you and your employer agree in the contract.
Be careful with websites that quote a specific “minimum wage” figure for the UAE — these numbers are unverified and have no basis in the labour law. What the law does require is that wages are paid on time through the Wage Protection System (WPS), and that the agreed salary in your registered contract is honoured.
Key takeaways
- Gratuity = 21 days basic/year (first 5 years), then 30 days/year — on basic salary only, capped at 2 years’ basic
- Same gratuity formula for resignation and termination since 2022
- Alternative ESOB scheme: 5.83% / 8.33% monthly employer contributions to an approved fund
- Gratuity must be settled within 14 days of your last working day
- Probation: max 6 months; notice period: 30–90 days
- Annual leave: 30 calendar days per year; maternity: 60 days; parental: 5 working days
- I’loe unemployment insurance is mandatory since January 2023
- No statutory minimum wage for private-sector expats — your contract sets your salary
Figures reflect Federal Decree-Law No. 33 of 2021 and Cabinet Resolution 96 of 2023 as applicable in 2026. Labour regulations can change; verify current rules with MOHRE (mohre.gov.ae) before making employment decisions.