Is UAE Gratuity Calculated on Basic Salary or Total Salary?
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UAE gratuity is calculated on your last basic salary only.
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Allowances such as housing, transport, and utilities are excluded.
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Your daily rate is monthly basic salary divided by 30.
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Because basic pay is often just over half of a package, using the wrong figure can cost thousands of dirhams.
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Always verify the basic figure on your MoHRE contract and payslips.
Quick answer: UAE end-of-service gratuity is calculated on your last basic salary only. Allowances such as housing, transport, and utilities are excluded. The daily rate used in the calculation is your monthly basic salary divided by 30.
This is the most common and most expensive misunderstanding in UAE final settlements, and it is a key part of our complete guide to UAE end-of-service gratuity.
Basic salary vs total salary
| Counts toward gratuity | Excluded from gratuity |
|---|---|
| Basic wage stated in your MoHRE contract | Housing allowance |
| Any amount contractually defined as basic wage | Transport, utilities, furniture, education allowances |
| Bonuses, commission, overtime |
Why the difference is so large
Suppose your package is 10,000 AED, split as 6,000 AED basic and 4,000 AED allowances. After five years, gratuity on the basic (6,000 AED) is 21,000 AED. On the full 10,000 AED it would be 35,000 AED, a gap of 14,000 AED. Employers must use basic wage, so check that they have. To see how the years add up, read how to calculate gratuity in the UAE.
How to verify your basic salary
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Find the basic wage line on your MoHRE-registered contract.
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Match it against your monthly payslips and WPS records.
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If HR's settlement uses a lower basic than your contract, that gap is your dispute lever, so keep the documents.
Check your own number
Enter only your basic salary in the UAE gratuity calculator, not your total package, to see the correct figure.
FAQ
Is gratuity based on gross or basic salary in the UAE?
Basic salary only, under Article 51 of Federal Decree-Law No. 33 of 2021.
Are commissions included in gratuity?
Generally no, unless your contract expressly treats them as part of basic wage.
What if my contract lists an unusually low basic?
Gratuity still follows the contractual basic. If it does not match your payslips, see the 14-day rule and what to do if unpaid.
Sources and References
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Federal Decree-Law No. 33 of 2021 (UAE Labour Law), Article 51 and the definition of basic wage
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Cabinet Resolution No. 1 of 2022 (Executive Regulations of the Labour Law)
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Ministry of Human Resources and Emiratisation, wages and end-of-service guidance (mohre.gov.ae)
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UAE Government portal, end-of-service gratuity (u.ae)
This article is for general information and does not constitute legal advice. End-of-service entitlements and disputes should be reviewed with a qualified professional or the Ministry of Human Resources and Emiratisation (MoHRE).