Gratuity After Resignation in UAE 2025 – Rules, Calculation & Eligibility Guide

Understanding gratuity after resignation in UAE 2025 is essential for employees planning to leave their jobs and wanting to know what end-of-service benefits they deserve. The Ministry of Human Resources and Emiratisation (MOHRE) defines clear rules under the UAE Labour Law for calculating gratuity when an employee resigns after completing at least one year of service. This guide outlines those rules, calculation methods, and procedures so every worker receives a fair and transparent settlement.

Overview of Gratuity on Resignation

In the UAE, gratuity is a legally mandated end-of-service payment awarded to employees who have completed at least one year with their employer. When a worker resigns, the final amount depends on several factors including contract type, total service years, and reason for leaving. The MOHRE Labour Law ensures both employers and employees follow clear standards when determining the payout. Whether under a limited or unlimited contract, any employee who meets the service requirement qualifies for gratuity benefits.

How MOHRE Handles Resignation Cases

MOHRE considers resignation a voluntary decision by the employee to end employment. Under Federal Decree Law No. 33 of 2021 and its executive regulations, any employee who resigns after one year of continuous service is entitled to receive gratuity. However, entitlement can be forfeited in cases of disciplinary dismissal or breach of contract, such as failing to serve the notice period. Employers are legally required to clear dues and release the gratuity within 14 days of the employee’s final working day.

Minimum Service Requirement for Gratuity

Employees with less than one year of service are not eligible for gratuity in the UAE. Once a full year is completed, entitlement starts accumulating and grows each additional year. Partial years are also counted in the final computation, ensuring fair compensation even for those who resign mid-year.

Eligibility for Gratuity After Resignation

Not every employee who resigns in the UAE automatically qualifies for gratuity. The MOHRE Labour Law 2025 outlines specific eligibility conditions that must be met before an employee can claim end-of-service benefits. Understanding these conditions ensures that both workers and employers follow the correct process when handling settlements.

Gratuity eligibility after resignation depends on three main factors:

• The total length of service.
• The type of employment contract (limited or unlimited).
• The reason and manner of resignation.

Basic Conditions for Eligibility

To qualify for gratuity after resignation in UAE 2025, an employee must meet the following requirements:

• Minimum one year of continuous service: Employees must complete at least 12 months with the same employer before becoming eligible for gratuity.
• No disciplinary termination: If an employee is dismissed due to misconduct or violation of Article 44 of the UAE Labour Law, gratuity may be forfeited.
• Proper notice period: The employee must serve the notice period as per the employment contract or compensate the employer for unserved days.
• Completion of final settlement: All dues, including unused leave balance, overtime, and allowances, should be calculated alongside gratuity.

These rules apply to both private sector and free zone employees who are covered under MOHRE or the respective free zone authority.

Cases Where Gratuity Is Not Paid

Although most employees who resign after one year are eligible, there are certain situations where gratuity is not granted:

• Service less than one year: If the employee resigns before completing 12 months of service, no gratuity is payable.
• Termination for cause: Employees terminated under disciplinary action lose their gratuity rights.
• Breach of employment terms: Failure to serve notice period, leaving without informing the employer, or violating contractual terms can affect eligibility.
• Unauthorized absences: Continuous absence from work without valid reason or approval can lead to forfeiture of benefits.

It’s also important to note that MOHRE encourages employees to settle disputes amicably through HR departments before filing formal complaints. However, if the employer refuses payment, the worker can raise the issue through MOHRE’s official channels.

Gratuity Calculation Formula for Resigned Employees

The UAE Labour Law clearly defines how gratuity is calculated when an employee resigns after completing one year or more of continuous service. The formula is based on the worker’s basic salary, excluding allowances such as housing, transportation, or bonuses. The calculation also depends on whether the employee has worked less than five years or more.

In most cases, gratuity after resignation in UAE 2025 is determined using either the 21-day or 30-day salary formula, depending on the total length of employment.

Standard 21-Day and 30-Day Rule Explained

Under MOHRE Labour Law, the gratuity formula is as follows:

• For service between 1 and 5 years:
  The employee receives 21 days of basic salary for each completed year of service.
• For service over 5 years:
  The employee receives 30 days of basic salary for every additional year beyond the first five.

However, the total gratuity amount cannot exceed two years’ worth of basic salary. Employers must pay this amount within 14 days after the end of employment, as stated in Article 53 of the UAE Labour Law.

Example 1 – 2 Years of Service

If an employee earns AED 8,000 per month and resigns after 2 years, the calculation will be:

(8,000 ÷ 30) × 21 × 2 = AED 11,200

Hence, the total gratuity payable is AED 11,200.

Example 2 – 5 Years of Service

For a worker earning AED 10,000 per month and resigning after 5 years:

(10,000 ÷ 30) × 21 × 5 = AED 35,000

So, the gratuity amount equals AED 35,000.

Example 3 – 10 Years of Service

If the employee’s basic salary is AED 12,000 and they have completed 10 years, the first five years are calculated at 21 days and the next five at 30 days.

(12,000 ÷ 30 × 21 × 5) + (12,000 ÷ 30 × 30 × 5) = AED 126,000

Thus, the total gratuity payable will be AED 126,000.

Important Notes for Accurate Calculation

• Only basic salary is considered; allowances are excluded.
• Any unpaid leave or absence without notice may reduce the total gratuity.
• The calculation includes partial years, rounded to months.
• MOHRE recommends using an online calculator for quick and accurate estimation.

Limited vs Unlimited Contract Scenarios

When calculating gratuity after resignation in UAE 2025, the type of employment contract, whether limited or unlimited, significantly affects eligibility and the final payout. Both contract types fall under the MOHRE Labour Law, but each follows different conditions and calculations when an employee resigns.

Resignation Impact Under a Limited Contract

In a limited-term agreement, the employee commits to working for a fixed duration, typically two or three years. If a worker resigns before completing the agreed period, they may lose part of their gratuity or face deductions for early termination. However, employees who complete the full contract term and resign afterward are fully entitled to gratuity based on the standard 21-day or 30-day salary formula.

Resigning early under a limited contract often leads to partial loss of benefits, while completing the full term ensures full entitlement. Employers are required to clear all dues, including gratuity, within 14 days after the employee’s final working day. For a detailed comparison of both contract types, you can read the Limited vs Unlimited Contract in UAE 2025 – Key Differences & Rules guide.

Resignation Impact Under an Unlimited Contract

Under an unlimited-term contract, either the employer or the employee can end the agreement by serving the required notice period, usually between 30 and 90 days. Employees who resign after completing one year of continuous service become eligible for gratuity, which increases after five years of employment.

If the resignation occurs after one year, the employee earns 21 days of basic salary per completed year. After five years, the entitlement rises to 30 days per year. Failing to serve the full notice period can result in deductions from the final gratuity payment. This flexibility gives employees more freedom to resign without penalty, provided they comply with MOHRE guidelines. For a better understanding of eligibility requirements, you may refer to the Gratuity Eligibility Rules 2025 – Complete Guide for UAE Employees.

MOHRE Rules for End-of-Service Benefits on Resignation

The MOHRE Labour Law outlines clear provisions regarding the payment of end-of-service benefits for employees who resign. These rules ensure that every eligible worker receives their dues promptly and fairly once their employment ends. In the context of gratuity after resignation in UAE 2025, MOHRE serves as the legal authority responsible for enforcing the rights of employees and setting standards for employers to follow.

Legal Reference from UAE Labour Law

According to Federal Decree Law No. 33 of 2021, employees who resign after one year of continuous service are entitled to a gratuity payment based on their final basic salary. The law specifies that gratuity must be calculated excluding allowances such as accommodation, transport, or bonuses.
If any dispute arises between employer and employee regarding payment, MOHRE acts as the official mediator to resolve the case through its labour complaint system. Workers can easily refer to the MOHRE Labour Law UAE 2025 – Official Rules & Complaint Process to understand their rights in such cases.

The same law ensures that gratuity cannot exceed the equivalent of two years’ salary, protecting both sides from unreasonable claims or underpayment.

Payment Timeline and Employer Obligations

Employers are legally required to release the gratuity amount and all other pending dues within 14 days from the employee’s last working day. Any delay in settlement violates Article 53 of the UAE Labour Law and can result in penalties.

MOHRE also encourages employees to verify that their end-of-service calculations are accurate before signing final settlements. Workers can use the official UAE Gratuity Calculator available on the homepage of our platform to estimate the correct amount based on years of service and basic salary.

Common Mistakes to Avoid When Calculating Resignation Gratuity

Using Total Salary Instead of Basic Salary

One of the most common errors employees make is including housing, transport, or allowance in their gratuity calculation. According to MOHRE Labour Law, gratuity must be calculated only on the basic salary, not on the total monthly income.

For instance, if your total salary is AED 12,000 and your basic salary is AED 8,000, only AED 8,000 should be used in the formula. Using total salary will give inflated results and may cause disputes during final settlement.

Ignoring Partial Years of Service

Many people wrongly believe gratuity is paid only for completed years.
However, the UAE Labour Law states that any fraction of a year should be counted proportionally.
For example, if you worked 3 years and 6 months, you’ll receive gratuity for 3.5 years.
Always ask HR to include these months to avoid underpayment.

Misunderstanding Contract Type

Each contract type - limited or unlimited - has its own gratuity calculation rules.
If you resign under a limited contract before completing the full term, gratuity may be partially lost or reduced.
Under an unlimited contract, you can resign anytime with proper notice and still qualify if you’ve completed one year.
Applying the wrong contract rule often leads to incorrect estimates.For clarity, visit Limited vs Unlimited Contracts in UAE 2025.

Forgetting to Deduct Unpaid Leaves or Absences

• Unpaid leave days or long absences without approval are not included in total service duration.
• This can reduce your gratuity entitlement.
• Before your company processes the final settlement, ensure all leave records are accurate and approved by HR.

Not Verifying Employer’s Calculation

Many employees simply sign the final settlement letter without double-checking the gratuity calculation.Always recalculate using the MOHRE-approved formula or the official UAE Gratuity Calculator. This ensures you get the exact amount you’re entitled to and prevents future disputes.

Step-by-Step Process to Claim Gratuity After Resignation

Review Your Employment Contract

Before submitting your resignation, read your employment contract carefully.
Identify whether you are under a limited or unlimited contract, as this determines your gratuity eligibility and notice period.
Confirm important clauses related to resignation, early termination, and final settlement.
Knowing your contract type helps avoid penalties or delays later in the process.

Submit a Formal Resignation Letter

Write a clear and professional resignation letter addressed to your employer or HR department.
Mention your last working day and ensure you serve the notice period mentioned in the contract (usually 30 to 90 days).
Submitting resignation in writing keeps a formal record with the company and helps prove that the notice requirement was fulfilled.

Complete the Notice Period and Handover

Continue working professionally during your notice period.
Complete all pending tasks, projects, and responsibilities before your departure.
Prepare a proper handover document listing ongoing duties and submit company assets such as ID cards, laptops, or equipment.
This ensures a smooth clearance process and avoids deductions from your final settlement.

Request Final Settlement from HR

After your last working day, request your final settlement statement from the HR department.
This document should include:

• Gratuity amount based on your service years.
• Unused annual leave balance.
• Pending salary, bonuses, or overtime.

Always cross-check that the gratuity amount is calculated using your basic salary only.
If there are discrepancies, discuss them with HR before signing the settlement acknowledgment.

Confirm Payment Timeline

According to Article 53 of the UAE Labour Law, employers must pay all pending dues - including gratuity - within 14 days after the end of employment.
If your payment is delayed beyond this period, it counts as a labour violation.
Keep a record of all email or written communication related to your final settlement to support your case if needed.

File Complaint with MOHRE (If Payment Is Delayed)

If your employer does not release the gratuity or settlement amount within the legal period, you can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE).
You can submit the complaint in three ways:

• MOHRE Smart App (available on Android and iOS).
• Official MOHRE Website at www.mohre.gov.ae.
• Nearest Labour Office in your emirate.

Required documents:

• Emirates ID
• Labour contract or offer letter
• Salary slips or bank transfer proof
• Resignation acceptance or last working day confirmation

MOHRE will review your complaint, contact your employer, and mediate between both parties.
If no agreement is reached, the case is referred to the Labour Court for final resolution.

Verify and Receive Final Payment

Once your employer processes the payment, double-check the total amount received.
Ensure it includes:

• Full gratuity as per law.
• All unpaid leave and overtime dues.
• Salary for the notice period, if applicable.

Keep a signed copy of the final settlement statement for your personal records. This document serves as proof in case of future legal or employment disputes.

FAQs – Gratuity After Resignation in UAE 2025

Final Thoughts

Understand Your Rights Clearly

Employees in the UAE should be fully aware of their gratuity rights under MOHRE Labour Law 2025.
Knowing how gratuity works after resignation helps you secure what you legally deserve.
Always ensure your employer calculates your gratuity based on your basic salary and within the legal 14-day payment window.

Follow the Proper Procedure

By following each step - from reviewing your contract to filing a MOHRE complaint if needed - you can ensure a smooth and fair settlement process.
Submitting resignation in writing, completing your notice period, and verifying the final payment are key actions that protect your rights.

Use Official Tools for Accuracy

To avoid confusion or miscalculation, use the official UAE Gratuity Calculator available on our homepage.
It provides accurate results based on your salary, service period, and contract type, aligned with current MOHRE guidelines. Visit the UAE Gratuity Calculator to check your estimated end-of-service payment.

Stay Updated with Labour Law Changes

The UAE government regularly updates labour regulations to ensure fair treatment for all employees. Always refer to verified sources like the MOHRE website or our Labour Law 2025 reference guide for the latest changes on gratuity, contracts, and employee benefits.

Key Takeaway

Resigning from your job doesn’t mean losing your end-of-service rights.As long as you’ve completed at least one year, served your notice, and maintained good conduct, you are entitled to gratuity under the UAE Labour Law 2025.
Being informed, proactive, and careful ensures a transparent settlement and helps you move forward with financial confidence.