End of service in the UAE, explained simply

End-of-service gratuity is one of the largest payments an employer makes to a leaving employee. The rules are short. The mistakes usually come from applying them by hand, one leaver at a time.

The rule in four lines

Under Article 51 of the UAE Labour Law (Federal Decree-Law No. 33 of 2021), a full-time employee with at least one year of service is owed:

• 21 days of basic wage for each of the first five years
• 30 days of basic wage for each year after that
• A share for part years, in proportion to the time worked
• No more than two years' wage in total

The daily rate is the last basic monthly wage divided by 30. Allowances, overtime and bonuses are not included.

A worked example

An employee leaves after seven years on a basic wage of AED 10,000 a month. The daily rate is AED 333.33.

• First five years: 5 × 21 × 333.33 = AED 35,000
• Next two years: 2 × 30 × 333.33 = AED 20,000
• Total: AED 55,000

Someone who leaves after three and a half years on AED 6,000 basic gets 3.5 × 21 × 200 = AED 14,700.

Where it goes wrong

1. The wrong wage. Using the gross salary instead of the basic wage, or an old basic wage instead of the last one.
2. Part years forgotten. Rounding down to full years short-changes the employee.
3. No accrual. The cost appears all at once when someone leaves, instead of building up month by month in the accounts.
4. Contract changes missed. A promotion or a change from part time to full time changes the figure, but the spreadsheet does not know.
5. Errors at scale. One mistake in a formula is repeated for every leaver.

What good looks like

The gratuity is calculated by the payroll system, not a spreadsheet. It is accrued every month, so finance sees the liability before anyone resigns. Each employee's figure can be traced back to their contract history.

That is how Nurayn handles it. End of service is accrued as you go, with the rules applied per employee, and the final settlement is part of the same payroll run that pays everything else.