What is end of service gratuity? The UAE private sector rules and the accounting

The UAE government portal summarises the rules under Article 51 of Federal Decree-Law No. 33 of 2021. A worker with at least one year of continuous service is entitled to gratuity on termination; unpaid absence does not count. The amount is 21 days' salary for each of the first five years and 30 days' salary for each year after that. The total cannot exceed two years' wages. It is calculated on basic salary, not housing or transport allowances.

Employers must pay outstanding wages, entitlements and gratuity within 14 days of termination, and may deduct amounts the worker owes. Emirati employees are covered by pension and social security rules instead.

Take an employee in Abu Dhabi leaving after seven years. Five years at 21 days is 105 days, and two years at 30 days is 60 days, so 165 days of basic salary are due. If the daily basic wage is AED 300, that is AED 49,500, payable within 14 days. A business that has not provided for it meets the whole cost in one month.

There is also an optional savings scheme, where employers pay monthly contributions into an approved fund instead of the traditional gratuity.

HelloBooks does not calculate gratuity automatically. Your accountant works out the accrual, often monthly per employee, and posts it as a recurring journal to a gratuity provision account, so the balance sheet shows the liability as it builds. When someone leaves, the payment is matched against the provision. Payroll from HelloTime posts salary journals to the same ledger, and the AI agent can answer 'what is our gratuity provision today?' from the account balance.

If you want a separate provision account per branch or a report listing provisions by employee, ask for it at hello@hellobooks.ai.

Linked payroll ideas.

• Basic salary
• WPS
• Provision
• MOHRE