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UAE Free Zone End of Service Gratuity Calculator Reference 2026
UAE end of service gratuity (EOSG) is a mandatory payment to employees. Here is the 2026 reference guide for free zone employers.
In this guide:
What Is UAE Gratuity?
- EOSG: A lump sum payment owed to employees when their UAE employment ends (resignation, termination, contract expiry)
- Legal basis: UAE Federal Labour Law (Federal Decree Law No. 33 of 2021)
- Coverage: All employees under UAE Labour Law; free zone employees included
- Exception: DIFC and ADGM have their own employee savings plans replacing traditional gratuity
Gratuity Calculation Formula (Post-August 2023 Law)
- First 5 years: 21 days basic salary per year of service
- After 5 years: 30 days basic salary per year of service (for years beyond 5)
- Maximum: Capped at 2 years total basic salary (24 months)
- Basic salary: Base salary only; excludes housing, transport, and other allowances
Gratuity Calculation Example
- Employee with 3 years service; AED 10,000 basic salary per month
- Daily basic salary: AED 10,000 / 30 = AED 333.33
- Gratuity: 21 days x AED 333.33 x 3 years = AED 20,999
Free Zone Gratuity Obligations
- Employer must pay: EOSG is a legal obligation; cannot be waived by contract
- Timing: Must be paid on last day of employment or within a reasonable period
- DIFC/ADGM: Employee Workplace Savings Plan (EWSP) used instead; monthly contributions required
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