A final settlement is not one number, it is five — and two of them are calculated on basic salary while two are calculated on the total wage. That split is where most UAE settlement disputes start, and it is the thing this calculator is built to get right.
UAE final settlement calculator
Gratuity and leave encashment are calculated on basic salary. Unpaid wages and notice pay are calculated on the total wage. Getting that split wrong is the single commonest settlement error.
Indicative only. Contractual terms more generous than the statutory minimum, unpaid leave, disputed terminations and DIFC or ADGM employment all change the answer. Not a substitute for advice on a specific case.
What a UAE final settlement is made of
| Component | Calculated on | Rule |
|---|---|---|
| End of service gratuity | Basic salary | 21 days per year for the first five years, 30 days per year after, capped at two years’ total wage. Payable after one year of continuous service |
| Annual leave encashment | Basic salary | Unused accrued leave days |
| Unpaid wages | Total wage | Earned up to the last working day |
| Notice pay in lieu | Total wage | Where notice is not served |
| Other contractual dues | As contracted | Repatriation ticket, bonus, commission — only if the contract provides for them |
| Less lawful deductions | — | Loans, advances, and anything the law permits to be set off |
Basic is not total. If your basic salary is AED 10,000 of a AED 15,000 package, your gratuity runs on 10,000. Employers who promise gratuity on the full package are offering more than the law requires — which is allowed, but it needs to be in the contract and it needs to be accrued for.
The 14-day rule
Under Article 53 of Federal Decree-Law No. 33 of 2021, the employer must pay all end of service entitlements within 14 days of the contract ending. Not 14 working days, and not when the visa cancellation completes.
For employers that is a cash-flow fact rather than an administrative one: a senior departure can be a six-figure obligation falling due a fortnight after the last working day. It is also the clearest argument for accruing gratuity monthly rather than treating it as a surprise.
Five errors we see in settlement calculations
- Gratuity run on total package. Overstates the liability, and once paid once it sets a precedent for everyone else.
- Leave encashment run on total wage. Leave is encashed on basic. This is the mirror image of error one and just as common.
- The old resignation discount applied. Before 2022, resigning within five years reduced gratuity. That reduction no longer exists — see UAE labour law.
- Partial years ignored. Service accrues pro rata after the first year. Three years and seven months is not three years.
- The two-year cap forgotten. Total gratuity cannot exceed two years’ total wage. It bites on long service at a high basic.
If you are the employer
The settlement is the visible event. The accounting problem usually started years earlier.
- Is the obligation on your balance sheet? Gratuity accrues from the first year of service and belongs in the accounts as it builds. An auditor who finds no provision will raise it.
- Does your basic-to-allowance split hold up? It has to be consistent across the contract, the payroll, the WPS file and the accrual. Our payroll and WPS service reconciles those four.
- Are leave balances tracked? Untracked leave becomes an unquantified liability that surfaces at exactly the wrong moment.
- Is the whole workforce provisioned, not just leavers? See the employer guide.
Where this calculator does not apply
The DIFC and ADGM operate their own employment regimes and their own end of service arrangements. If your contract sits in either, the federal rules above are not the ones that govern it — see DIFC and ADGM compliance.
Contractual terms more generous than the statutory minimum also override the calculation. Read the contract before relying on any figure, including this one.
Frequently asked questions
Add end of service gratuity and annual leave encashment, both on basic salary, to unpaid wages and any notice pay in lieu, both on the total wage, plus any contractual dues such as a repatriation ticket. Then subtract lawful deductions such as loans and advances. The result is the net amount payable.
Within 14 days of the contract ending, under Article 53 of Federal Decree-Law No. 33 of 2021. That is 14 calendar days from the end of the contract, not from the completion of visa cancellation.
Basic salary. This is the mirror of the gratuity rule and the two are confused in opposite directions roughly equally often. Unpaid wages and notice pay, by contrast, are calculated on the total wage.
No. Under the law in force since February 2022, the reduction that used to apply when an employee resigned within the first five years has been removed. Gratuity is also payable where the contract is terminated without notice.
Yes. Total gratuity cannot exceed two years of total wage. It is rarely reached on short service but bites on long service at a high basic salary, and the calculator applies it automatically.
No. End of service gratuity requires one year of continuous service. Unpaid wages and accrued leave are still payable below that threshold.
No. Both financial free zones operate their own employment regimes with their own end of service arrangements, so the federal rules this calculator uses are not the ones that govern those contracts.