Last updated: May 2026
Why basic salary matters
One of the most common UAE gratuity mistakes is using total salary instead of basic salary. Total salary can include housing allowance, transport allowance, commission, bonuses, and other benefits. A simple gratuity estimate is generally based on basic salary. This matters because two employees with the same total package can have different gratuity estimates if their basic salary is different.
Example calculation
If total salary is AED 12,000 but basic salary is AED 6,000, the simple gratuity estimate uses AED 6,000. Using AED 12,000 would likely overestimate the amount.
Common estimate rules
- Less than 1 year of service: commonly estimated as no gratuity.
- 1 to 5 years: commonly 21 days of basic salary per completed year.
- More than 5 years: commonly 21 days per year for the first 5 years, then 30 days per extra year.
- Total gratuity is generally capped and special cases may change the result.
FAQ
Where do I find basic salary?
Check your employment contract, salary certificate, or HR/payroll documents.
Can total salary ever matter?
Total salary may matter for other settlement items, but gratuity estimates commonly start with basic salary.
Why do companies split salary into basic and allowances?
Salary structures vary, but gratuity calculations make the basic salary figure especially important.