Understanding End-of-Service Benefits in the UAE (Gratuity 2025 Update)

Planning for Gratuity in the UAE: What Employers and Employees Must Know in 2025

Brightlink Management Consultancy – Your HR & Legal Partner in the UAE

Introduction

As of 2025, the UAE continues to evolve its labor policies to support both employers and employees. One of the most important entitlements for employees in the UAE is the End-of-Service Benefits, also known as gratuity. Whether you’re an employer looking to stay compliant or an employee planning your financial future, understanding these benefits is essential.

This blog will guide you through the latest updates on UAE gratuity laws, eligibility, calculation methods, and best practices to ensure compliance and transparency.

What Are End-of-Service Benefits?

End-of-service benefits are a lump-sum payment made by employers to employees who complete their employment term. It is mandated by UAE Labour Law (Federal Decree Law No. 33 of 2021) and applies to both private and public sector workers.

Gratuity Eligibility in the UAE

To qualify for gratuity pay in the UAE:

  • The employee must have completed at least one year of continuous service.
  • The employment contract must be terminated legally (not for gross misconduct).
  • Resignation may still qualify for gratuity, depending on the contract type (limited or unlimited).

Gratuity Calculation in 2025 (Updated)

As per UAE Labour Law 2025 updates:

  • Basic Salary Basis: Gratuity is calculated based on the employee’s last drawn basic salary, excluding allowances.
  • Calculation Structure:
    • 0–1 year of service: Not eligible
    • 1–5 years: 21 days’ basic salary for each completed year
    • 5+ years: 30 days’ basic salary for each additional year after the fifth

Maximum Limit: The total gratuity cannot exceed two years’ worth of basic salary.

Gratuity for Part-Time or Temporary Employees

The 2025 updates confirm that even part-time and flexible work employees are entitled to pro-rated gratuity based on actual working hours and duration.

Key Considerations for Employers

  • Ensure accurate payroll and contract documentation.
  • Use MoHRE-approved tools or professional consultants to calculate gratuity.
  • Keep detailed service records to avoid disputes.
  • Communicate the gratuity policy clearly to employees.

Why Choose Brightlink Management Consultancy?

At Brightlink, we simplify end-of-service benefit calculations and ensure full compliance with UAE labor regulations. Whether you’re handling a single resignation or planning a company-wide HR audit, our experts ensure every step is legally sound and financially optimized.

Conclusion

Understanding your obligations (as an employer) or rights (as an employee) regarding end-of-service gratuity in the UAE is crucial in 2025. With updated labor laws supporting flexibility and clarity, it’s more important than ever to stay informed.

Need help with gratuity calculation or employee settlements?
📞 Call Brightlink at +97145575778 or +971566556645
📧 Email: info@brightlinkconsulting.ae
🌐 www.brightlinkconsulting.ae

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