๐ฐ UAE End of Service
Gratuity (EOSG): New Calculation Rules and Contract Types (2025 Update)
The calculation and entitlement rules for the End of Service
Gratuity (EOSG) have been entirely updated under the Federal Decree-Law No.
33 of 2021 (the New UAE Labour Law), effective from February 2, 2022.
1. The Core Calculation (Article 51)
The calculation method (21 days for the first 5 years, 30
days thereafter) remains, but the maximum cap is removed, and the calculation
basis is confirmed.
|
Old Law (Article 132) |
Current Law (Article 51) |
|
Calculation: 21 days for the first 5 years, 30 days
for subsequent years. Maximum Cap: Total gratuity cannot exceed 2
years' salary. |
Calculation: Same rates apply. 21 days for
the first 5 years, 30 days for subsequent years. Maximum Cap: REMOVED.
The total gratuity is not capped at two years' salary. |
|
Part of the Year: Entitled to a prorated amount
after one year of service. (Article 133) |
Part of the Year: Confirmed. The worker is
entitled to a prorated amount for the fraction of the year, provided one full
year of service is completed. |
|
Leaves Without Pay: Not included in the service
period. (Article 132) |
Leaves Without Pay: Confirmed. Periods of
unpaid leave are excluded from the service period calculation. |
2. The Calculation Basis: BASIC Salary Only
The current law explicitly confirms the calculation basis.
|
Old Law (Article 134) |
Current Law (Article 51) |
|
Basis: Calculated based on the last basic salary.
Confusing Point: Stated allowances "shall be included in the
basic salary" (which was legally disputed). |
Basis: Calculated exclusively on the Basic
Salary. Clarified: The law confirms that allowances (housing,
transport, commission, etc.) are NOT included in the gratuity
calculation. |
3. Contract Type Distinction: UNLIMITED is ABOLISHED
This is the most critical change. The distinction between
Unlimited and Limited contracts for EOSG calculation is GONE because the
Unlimited Contract type is abolished for new/renewed contracts.
|
Old Law (Articles 137 & 138) |
Current Law (Article 51 & 42) |
|
Unlimited Contract Resignation: Reduced Gratuity
(1/3 or 2/3 reduction based on service period). |
Fixed-Term Contract Resignation: NO REDUCTION.
The worker is entitled to the full gratuity regardless of the length of
service (after 1 year), provided they comply with the lawful termination
(notice period). |
|
Limited Contract Resignation: Forfeiture unless
service exceeded 5 years. |
Forfeiture: ELIMINATED. There are no
reductions or forfeitures for an employee's resignation under the new
law, provided they follow the lawful notice period. |
4. Forfeiture and Dismissal (Article 51 & 44)
The conditions for the worker being banned from gratuity
have been streamlined and simplified.
|
Old Law (Article 139) |
Current Law (Article 51) |
|
Forfeiture: Worker dismissed under Article 120
(gross misconduct) OR worker voluntarily resigns without notice
(unlimited contract) OR limited contract worker resigns before 5
years. |
Forfeiture: The worker forfeits the entire gratuity
ONLY if they are dismissed for one of the 11 specific reasons
listed in Article 44 (Gross Misconduct). |
|
Voluntary Resignation: Forfeiture is ABOLISHED
for lawful resignation. |
5. Death, Savings, and Pensions (Article 51)
- Death:
Confirmed. If the worker dies, the employer must pay the full
gratuity to the heirs.
- Savings/Pension
Funds (Article 140 & 141): Confirmed. The worker retains
the right to choose between the gratuity or any better terms offered by a
savings/pension scheme, provided the scheme terms allow it.
6. Return Tickets (Not in EOSG Law)
The obligation for return tickets is NO LONGER tied
to the EOSG Law but to the general conditions of the employment contract
(Article 13).
- Current
Rule: The employer is responsible for the worker's return ticket to
their home country upon termination of the contract, unless the
worker joins a new employer in the UAE, or the worker is dismissed for
gross misconduct (Article 44 reasons).
