What is gratuity?
Gratuity (also called an end-of-service benefit) is a lump sum an employer pays a worker when their employment ends — on resignation, retirement or termination — as a reward for their years of service. It's separate from your final salary and any provident fund.
How gratuity is calculated
Every country starts from a daily wage = last monthly salary ÷ 30, then multiplies by the number of days' wages the law grants per year of service. The difference is in how many days — and in the Gulf, that number changes after five years, so a single flat rate gives the wrong answer for long service.
End-of-service rules by country
| Country | Years 1–5 | After year 5 | Key conditions |
|---|---|---|---|
| 🇵🇰 Pakistan | 30 days/yr | 30 days/yr | Standing Orders Ordinance. A part-year over 6 months usually counts as a full year. |
| 🇦🇪 UAE | 21 days/yr | 30 days/yr | Needs 1 full year. Capped at 2 years' pay. Based on basic salary. Resigning no longer reduces it (2021 law). |
| 🇸🇦 Saudi Arabia | ½ month/yr | 1 month/yr | Art. 84. Resigning reduces it (Art. 85): nothing under 2 years, ⅓ for 2–5, ⅔ for over 5 up to 10, full at 10+. |
| 🇶🇦 Qatar | 21 days/yr | 21 days/yr | Art. 54 legal minimum (3 weeks); contracts often give more. Needs 1 year. Basic salary only. |
Worked examples: a 10,000 monthly salary
The same salary under each country's rules, so you can see how much the tiers and the Saudi resignation rule matter. Scale linearly for your own salary — at 20,000 a month, double every figure.
| Service | Pakistan | UAE | Saudi (ended) | Saudi (resigned) | Qatar |
|---|---|---|---|---|---|
| 3 years | 30,000 | 21,000 | 15,000 | 5,000 | 21,000 |
| 5 years | 50,000 | 35,000 | 25,000 | 8,333 | 35,000 |
| 10 years | 100,000 | 85,000 | 75,000 | 75,000 | 70,000 |
| 20 years | 200,000 | 185,000 | 175,000 | 175,000 | 140,000 |
Two things stand out. In Saudi Arabia, resigning at 3 years pays a third of what being let go would — 5,000 instead of 15,000. And the UAE and Saudi figures pull ahead of a flat-rate estimate after year 5, because every later year earns a full month.
Important notes
- Rules differ by country, sector and contract — this is an estimate, not legal advice.
- "Salary" here means the wage your gratuity is based on (often basic pay, sometimes basic plus fixed allowances). Check which applies to you.
- Minimum service periods and eligibility conditions may apply.
How is end of service benefit calculated in the UAE?
Under Federal Decree-Law 33 of 2021: 21 days' basic salary for each of the first 5 years, then 30 days for each year after, with part-years pro rata. You need at least one full year of service, and the total is capped at two years' pay. On a 10,000 basic salary, 10 years gives 21 × 5 + 30 × 5 = 255 days, or 85,000.
How is end of service calculated in Saudi Arabia?
Article 84 grants half a month's wage per year for the first 5 years and a full month per year after. If you resign, Article 85 reduces it: nothing before 2 years, one-third from 2 to 5 years, two-thirds from over 5 to under 10, and the full amount from 10 years. If the employer ends the contract or it expires, you get the full award.
Do I get gratuity if I resign?
It depends on the country. In the UAE, resigning no longer reduces it under the 2021 law, provided you've done a full year. In Saudi Arabia resignation cuts it sharply — to a third at 2–5 years. In Pakistan and Qatar the standard rate applies. Pick your country above and the calculator applies the right rule.
How much gratuity for 5 years in the UAE?
105 days' basic salary (21 days × 5 years) — about 3.5 months' basic pay. On a 10,000 basic that's 35,000. Each year after the fifth then adds 30 days.
Is gratuity taxable?
It depends on your country and amount — some jurisdictions exempt gratuity up to a limit. Check your local tax rules.
Does a partial year count?
Often a period beyond six months is rounded up to a full year, but this varies. Adjust the "years" figure to match your rule.
Basic salary or gross?
Many laws base gratuity on basic pay (sometimes plus fixed allowances), not total gross including variable bonuses. Use the figure your contract specifies.