End of Service Benefits UAE: Whether you’re resigning, switching jobs, or ending your work contract in the UAE, understanding your end of service benefits is crucial. The UAE Labour Law entitles employees to a gratuity payment, often called “end of service,” when they complete a certain period of continuous service.
This comprehensive 2025 guide explains who qualifies, how gratuity is calculated, differences between limited and unlimited contracts, and your legal rights during termination or resignation.
End of Service Benefits UAE 2025 Full Calculation Guide
What Are End of Service Benefits?
End of service benefits UAE (ESB) are lump-sum payments given to employees when their employment ends whether due to resignation, contract completion, retirement, or termination. It is calculated based on your basic salary and length of service.
In 2025, the UAE Labour Law continues to mandate gratuity for all private sector employees under full-time employment (MOHRE or free zone authorities), with some updates to contract types and benefit rules.
Who Is Eligible?
You’re entitled to ESB if you:
Are on a limited or unlimited contract
Have completed 1 year or more of continuous service
Resigned legally or were terminated without misconduct
Are not under part-time, temporary, or freelance contracts (unless agreed upon)
Domestic workers, public sector employees, and freelancers may follow different guidelines.
Contract Types & Impact on Gratuity
There are two types of contracts in the UAE:
🔹 1. Limited Contract
Fixed start and end date
Ending early may result in penalties (unless both parties agree)
🔹 2. Unlimited Contract
Flexible end date, with notice period rules
Termination or resignation must follow correct legal process
As of Labour Law Federal Decree-Law No. 33 of 2021, unlimited contracts were phased out by 2023. Most contracts in 2025 are now limited but renewable.
Gratuity Calculation Formula (2025)
Here’s how ESB is calculated:
For First 5 Years of Service:
21 days of basic salary per year of service
After 5 Years of Service:
30 days of basic salary per year beyond 5 years
Formula:
Gratuity = (Basic Monthly Salary ÷ 30) × [21 or 30] × Years of Service
✅ Gratuity is based on basic salary only, not total salary (no allowances).
Example Calculations
Example 1: 3 Years of Service
Basic Salary: AED 5,000
Years of Service: 3
Formula: (5000 ÷ 30) × 21 × 3 = AED 10,500
Example 2: 7 Years of Service
First 5 years: (5000 ÷ 30) × 21 × 5 = AED 17,500
Remaining 2 years: (5000 ÷ 30) × 30 × 2 = AED 10,000
Total ESB: AED 27,500
Deductions or Reductions in Gratuity
You may get reduced or no gratuity if:
| Case | Impact |
|---|---|
| Less than 1 year of service | ❌ Not eligible |
| Terminated for gross misconduct | ❌ No gratuity |
| Resigned with <5 years service | May receive reduced gratuity |
| Unpaid leave periods | ❗ Not counted in total service |
| Absconding cases | ❌ Disqualified from gratuity |
Resignation Rules & Gratuity (2025)
If you resign after 1 year and complete notice period, you get partial ESB
If you resign after 5+ years, you are entitled to full gratuity
Failing to serve notice period (usually 30–90 days) may result in deductions
Gratuity Payment Timeline
End of Service Benefits UAE: After termination or resignation:
Employers must pay ESB within 14 days
Delays can result in MOHRE fines up to AED 5,000 per worker
ESB must be paid in full, no installment plans allowed
What Happens If Company Closes?
End of Service Benefits UAE: If your company shuts down:
You’re still entitled to ESB from liquidated assets or insurance
File a labour complaint with MOHRE or Free Zone Authority
You may also receive unemployment insurance (if enrolled in Involuntary Loss of Employment scheme)
Can You File a Complaint?
End of Service Benefits UAE: Yes. If your employer:
Refuses to pay ESB
Pays you less than what’s due
Delays payment beyond 14 days
File a complaint via:
MOHRE App or Website
Call 800 60
Tawjeeh Center / Labour Court
Required Documents for Gratuity Disputes
Employment contract
Salary slips
Resignation/termination letter
Visa cancellation proof
Bank statements (if WPS used)
Mahad HRC’s Support for Employees
End of Service Benefits UAE: At Mahad HRC, we help job seekers and current employees across the UAE by:
Calculating exact ESB as per the latest law
Drafting legal resignation letters with notice
Filing complaints with MOHRE or free zone authorities
Negotiating settlements with employers
Providing legal translation and documentation support
Contact us for gratuity calculators, resignation templates, and labour law assistance.
Conclusion
The end of service benefits UAE are a vital part of your career journey and financial protection. Whether you resign or are terminated, knowing your legal rights ensures you receive what you’re entitled to. With 2025 updates reinforcing employee protections, understanding the process is easier than ever.