When an employee leaves a private-sector job in the UAE, the employer must pay a final settlement (often called full and final settlement). Getting it right protects both sides and avoids complaints to MOHRE. This guide explains what goes into it, how each part is calculated, and when it must be paid.
What a final settlement usually includes
- Unpaid salary up to the last working day, including allowances in the contract.
- Notice period pay. The notice period is set in the contract and runs from 30 to 90 days. The employee is paid full salary during notice, and if either side skips the notice it normally pays salary in lieu.
- Unused annual leave, including leave earned in the final part-year, paid on basic salary.
- End-of-service gratuity, for employees with at least one year of continuous service.
- Other amounts in the contract, such as earned commission, bonus or a return ticket where the contract or law requires one.
- Less any lawful deductions, such as an outstanding salary advance or loan the employee agreed to in writing.
How gratuity is calculated
- Based on the last basic salary, not total salary.
- 21 days' basic salary for each of the first five years of service.
- 30 days' basic salary for each year after five years.
- Part-years after the first full year are paid pro rata.
- The total cannot exceed two years' wages.
- No gratuity is due for less than one year of continuous service.
When it must be paid
The employer must pay all end-of-service dues and outstanding wages within 14 days of the contract ending. If payment is late, the employee can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE).
Worked example
An employee earns a basic salary of AED 6,000 a month (total package AED 10,000), works 3 years and 4 months, and has 12 days of unused leave.
- Daily basic wage: AED 6,000 × 12 ÷ 365 = AED 197.26 (some employers use ÷ 30 = AED 200; check your company policy).
- Gratuity: 21 days × 3.33 years = 70 days × AED 197.26 = AED 13,808.
- Unused leave: 12 days × AED 197.26 = AED 2,367.
- Add salary for days worked in the final month and any notice pay owed, then subtract agreed deductions.
A simple checklist for HR
- Confirm the last working day and whether notice was served in full.
- Pull the latest basic salary and allowances from the contract.
- Check the leave balance, including leave earned in the final part-year.
- Calculate gratuity, leave pay, notice pay and final-month salary.
- List deductions with the employee's written consent.
- Prepare a settlement statement and get it signed on payment.
- Pay within 14 days and keep the signed statement with the employee file.
Templates for final settlement
- Final Settlement Calculator (Excel): salary, leave, notice and gratuity in one sheet.
- End-of-Service Gratuity Calculator (UAE, Excel): the 21-day and 30-day rules worked out for you.
- Annual Leave Balance Calculator (Excel): leave earned, taken and still due.
- Final Settlement Statement (Word): the document the employee signs on payment.
- Employee Exit Clearance Form (Word) and Experience Certificate (Word).
See all payroll and salary templates.
Sources: UAE Government portal (u.ae), annual leave; Gulf News, end-of-service gratuity; Gulf News, rights on leaving a job. Federal Decree-Law No. 33 of 2021. This guide is general information for private-sector employers on the mainland, not legal advice. Free zones such as DIFC and ADGM have their own rules; check with MOHRE or a lawyer for your case.