How this is calculated
- Only basic salary counts. Housing, transport and other allowances are excluded.
- A daily rate is basic ÷ 30, regardless of how many days are in the month.
- First five years: 21 days per year. After five years: 30 days per year, and the higher rate applies only to the years beyond the fifth.
- Part years are pro-rated once the first full year is complete.
- Less than one year of service means no gratuity is due.
- The total is capped at two years' total pay.
- Unpaid leave is deducted from length of service.
What changed in 2021 — and still catches people out
Under the old law an employee who resigned lost part of their gratuity on a sliding scale — one third under three years, two thirds under five. Federal Decree-Law 33 of 2021 abolished those reductions. An employee who resigns after four years now receives the same gratuity as one who is terminated. Calculators and spreadsheets written before 2022 still apply the old reduction, and quietly underpay.
What this does not cover
It calculates the gratuity itself. A real final settlement also includes unused annual leave, notice pay if applicable, outstanding salary, and any loans or fines to be deducted — which is why a settlement should stay editable before it is issued. Dismissal under Article 44 of the Decree-Law can remove entitlement entirely; that is a legal judgement, not an arithmetic one, so we flag it rather than decide it for you.
Gratuity you don't have to calculate.
Ellaelio HR tracks every employee's accrued gratuity as a live liability and produces the settlement document on your letterhead when they leave.
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