What Is the Maximum Gratuity in UAE? The 24-Month Cap Explained (2026)
Reviewed under Federal Decree-Law No. 33 of 2021 | Last updated: July 2026
UAE gratuity accumulates with every year of service — but it does not grow without a ceiling. No matter how many years you have worked, the law places a hard upper limit on the total amount your employer is required to pay. That limit is 24 months of your basic salary.
For most employees working standard UAE careers of five to fifteen years, this cap is never reached. But understanding how it works — and when it becomes relevant — is important for long-serving employees, those approaching significant service milestones, and anyone who suspects their employer may have applied it incorrectly.
This guide explains the legal source of the cap, shows exactly when it activates at different salary levels, and covers what you can do if you believe your employer has used the cap to underpay you.
To calculate your exact gratuity and see whether the cap affects your figure, use our free UAE Gratuity Calculator.
Table of Contents
- The Legal Source: Where the Cap Comes From
- What the 24-Month Cap Actually Means
- When Does the Cap Activate?
- Cap Threshold Table by Salary Level
- Cap vs No-Cap: Side-by-Side Worked Example
- The Cap Is Based on Basic Salary — Not Total Package
- When Employers Apply the Cap Incorrectly
- How to Dispute an Underpayment
- Frequently Asked Questions
The Legal Source: Where the Cap Comes From
The 24-month gratuity cap is established by Article 51 of Federal Decree-Law No. 33 of 2021, which governs end-of-service benefits for all private sector employees in the UAE.
The relevant portion of Article 51 reads, in plain terms, that the total end-of-service gratuity due to a worker shall not exceed the equivalent of two years of wages. In legal language, two years of wages — calculated at the basic salary rate — means 24 months of basic salary.
This cap has existed in UAE labour law across different legislative iterations. It was present in the previous labour law and was carried forward into the 2021 Decree. It is not a new restriction introduced by the reform — it is an ongoing feature of UAE gratuity law that pre-dates the 2023 changes.
What the 2021 reform did change was the resignation penalty rules and the unlimited contract system — not the cap itself. The cap remains at 24 months regardless of whether an employee resigned or was terminated.
What the 24-Month Cap Actually Means
The cap is a ceiling on the total gratuity payout. It does not change how the formula works or how gratuity accumulates year by year. It simply prevents the final total from exceeding a defined maximum.
Here is how it operates in practice:
The standard Article 51 formula calculates your gratuity as 21 days of basic salary per year for the first 5 years, and 30 days per year for every year beyond that. This formula produces a running total that grows with each year of service.
At some point — depending on your salary and service length — that running total may exceed 24 times your monthly basic salary. When it does, the formula result is disregarded and you receive exactly 24 months of basic salary instead. The excess is not paid.
If the formula produces a number below 24 months of basic salary, the cap is irrelevant. You receive exactly what the formula says. The cap only ever cuts into a gratuity amount — it never increases one.
When Does the Cap Activate?
The cap activates at the point where the cumulative formula result equals 24 months of basic salary. This happens at different service durations for different employees, and it can be calculated precisely.
For the first 5 years, gratuity grows at 21 days of basic salary per year. After 5 years, the total for that period is 105 days of basic salary (21 × 5). The remaining capacity before the cap is reached is 720 days − 105 days = 615 days of basic salary, which at the 30-day rate equals exactly 20.5 additional years.
Adding the first 5 years to 20.5 years gives approximately 25.5 years total service before the cap is reached. In practice, this means an employee working a continuous 26-year career would be approaching the cap for the first time — an unusually long tenure for private sector UAE employment.
The calculation above holds regardless of salary level, because the cap itself scales proportionally with salary. An employee earning AED 5,000 has a cap of AED 120,000. An employee earning AED 20,000 has a cap of AED 480,000. Both reach their respective caps at approximately the same service length.
Cap Threshold Table by Salary Level
The table below shows the 24-month cap amount at six common basic salary levels, along with the approximate service years at which the formula first reaches that cap.
| Basic Monthly Salary | 24-Month Cap Amount | Formula Reaches Cap After Approx. |
|---|---|---|
| AED 3,000 | AED 72,000 | ~25.5 years |
| AED 5,000 | AED 120,000 | ~25.5 years |
| AED 8,000 | AED 192,000 | ~25.5 years |
| AED 12,000 | AED 288,000 | ~25.5 years |
| AED 20,000 | AED 480,000 | ~25.5 years |
| AED 30,000 | AED 720,000 | ~25.5 years |
The approximate service years are identical across all salary levels because the formula and the cap both scale proportionally with salary. What changes between salary levels is not when the cap is reached but how large the capped amount is.
The practical takeaway for most employees: if you have worked fewer than 20 years for the same UAE employer, the 24-month cap almost certainly does not affect your gratuity. Run the formula or use our gratuity calculator to confirm your specific figure.
Cap vs No-Cap: Side-by-Side Worked Example
To make the cap tangible, here are two employees with the same salary but different service lengths — one whose gratuity is below the cap, and one whose calculated gratuity exceeds it.
Employee A — AED 15,000 Basic Salary, 12 Years of Service
| Step | Calculation | Amount |
|---|---|---|
| Daily wage | AED 15,000 ÷ 30 | AED 500 |
| First 5 years (21-day rate) | AED 500 × 21 × 5 | AED 52,500 |
| Years 6–12 (7 years at 30-day rate) | AED 500 × 30 × 7 | AED 105,000 |
| Formula total | AED 52,500 + AED 105,000 | AED 157,500 |
| 24-month cap | AED 15,000 × 24 | AED 360,000 |
| Final Gratuity | Formula result is below cap — full amount paid | AED 157,500 ✅ |
Employee B — AED 15,000 Basic Salary, 30 Years of Service
| Step | Calculation | Amount |
|---|---|---|
| Daily wage | AED 15,000 ÷ 30 | AED 500 |
| First 5 years (21-day rate) | AED 500 × 21 × 5 | AED 52,500 |
| Years 6–30 (25 years at 30-day rate) | AED 500 × 30 × 25 | AED 375,000 |
| Formula total | AED 52,500 + AED 375,000 | AED 427,500 |
| 24-month cap | AED 15,000 × 24 | AED 360,000 |
| Final Gratuity | Formula exceeds cap — cap applies | AED 360,000 ⚠ |
Employee B’s formula produces AED 427,500 but they receive AED 360,000 — a difference of AED 67,500 absorbed by the cap. The uncapped portion is not paid and cannot be claimed.
The Cap Is Based on Basic Salary — Not Total Package
This is a point many employees overlook, and it can lead to significant miscalculation.
The 24-month cap is applied to basic salary only. Allowances for housing, transport, food, telephone, and any other benefits — whether paid monthly or as a lump sum — are not included in the cap calculation.
Consider an employee whose employment contract shows the following:
| Salary Component | Monthly Amount |
|---|---|
| Basic Salary | AED 10,000 |
| Housing Allowance | AED 5,000 |
| Transport Allowance | AED 1,500 |
| Total Monthly Package | AED 16,500 |
| 24-Month Cap (Basic Only) | AED 240,000 |
| 24 Months of Total Package (for reference only — NOT how UAE law works) | AED 396,000 |
The cap for this employee is AED 240,000 — not AED 396,000. The allowances are not considered in either the formula or the cap. This distinction between basic salary and total package is one of the most consequential details in UAE gratuity law, and it applies at every stage of the calculation — not just at the cap level.
If your contract does not explicitly separate basic salary from allowances, or if all your earnings are listed as a single consolidated salary figure, contact your HR department to get the breakdown in writing before your service ends. The figure your employer uses for the gratuity calculation should match the basic salary stated in your original employment contract.
When Employers Apply the Cap Incorrectly
In a small number of cases, employers attempt to invoke the 24-month cap when it does not actually apply — either by misunderstanding the law or by deliberately using it to reduce a gratuity payment they do not want to make in full.
The cap can only legitimately be applied when the Article 51 formula genuinely produces a result that exceeds 24 months of basic salary. If your formula result is below the cap — which it will be for the vast majority of employees — your employer has no legal basis to limit your gratuity to 24 months.
Incorrect applications of the cap include:
- Applying a 24-month ceiling to an employee with fewer than 26 years of service whose formula result has not yet reached the cap
- Calculating the cap based on total salary rather than basic salary, producing an artificially lower figure
- Citing the cap as a reason to round down a gratuity figure that is already below the 24-month threshold
- Applying the cap to a pro-rata partial-year gratuity calculation incorrectly
If you suspect your employer has applied the cap incorrectly, the first step is to run your own calculation using our free gratuity calculator. If the result differs from what your employer has offered, request a written breakdown from HR explaining how they arrived at their figure. That written explanation will be important evidence if you need to escalate the dispute.
How to Dispute an Underpayment
If your employer has underpaid your gratuity — whether by incorrectly applying the cap, using the wrong salary figure, or simply refusing to pay the full calculated amount — you have a legal route to recover what you are owed.
Step 1: Calculate the Correct Amount Yourself
Before filing a complaint, confirm your own calculation. Use your basic salary as stated in your employment contract, your exact start and end dates, and subtract any unpaid leave days. Run the Article 51 formula. If the result is higher than what you received, document the difference clearly in writing.
Step 2: Request a Written Breakdown from Your Employer
Send a formal email or letter to HR asking for the complete calculation they used to arrive at your gratuity figure. Keep a copy of your request and their response. Many disputes are resolved at this stage once the employer realises the calculation was wrong.
Step 3: File a Complaint with MOHRE
If the employer does not respond or refuses to correct the payment, file a formal complaint with the Ministry of Human Resources and Emiratisation. You can do this through:
- The MOHRE website at mohre.gov.ae
- The MOHRE mobile app (available on iOS and Android)
- In person at any MOHRE service centre — bring your contract, payslips, ID, and the calculation showing the discrepancy
MOHRE will first attempt conciliation between you and the employer. If that does not resolve the issue, the case moves to the Labour Court, where the judge will apply the Article 51 formula to determine what is legally owed. Employers found to have underpaid without valid grounds are required to pay the full outstanding amount.
Frequently Asked Questions
What is the maximum gratuity in UAE?
The maximum gratuity in UAE is 24 months of basic salary, as set by Article 51 of Federal Decree-Law No. 33 of 2021. For example, an employee on AED 10,000 basic salary can receive a maximum of AED 240,000, regardless of how many years they have worked. An employee on AED 20,000 basic salary has a cap of AED 480,000. The cap applies universally across the private sector.
After how many years does the gratuity cap apply in UAE?
The cap activates when the Article 51 formula result reaches 24 times the monthly basic salary. For most salary levels, this happens after approximately 25 to 26 years of continuous service. Employees with shorter careers — which includes the majority of UAE private sector workers — will never reach the cap during normal working life.
Can an employer use the 24-month cap to reduce my gratuity?
Only if the formula genuinely produces a result higher than 24 months of basic salary. If your calculated gratuity is already below that threshold, the cap does not apply and your employer must pay the full formula result. Using the cap to reduce a gratuity that has not reached it is an unlawful underpayment that can be disputed through MOHRE.
Does the 24-month gratuity cap apply to all employees in UAE?
Yes — it applies to all private sector employees governed by Federal Decree-Law No. 33 of 2021, which covers the vast majority of employees across all seven emirates. Exceptions include employees under DIFC and ADGM frameworks, which operate separate end-of-service systems with different rules, and certain government sector workers who may fall under distinct regulations.
Is the gratuity cap based on basic salary or total salary?
Basic salary only. The 24-month cap, like the gratuity formula itself, is calculated using the basic salary figure from your employment contract. Allowances for housing, transport, food, or any other benefits are excluded. An employee with a total package of AED 20,000 but a basic salary of AED 12,000 has a cap of AED 288,000 — not AED 480,000.
Key Points: The 24-Month Cap at a Glance
- The maximum gratuity in UAE is 24 months of basic salary — set by Article 51
- The cap only applies when the formula result exceeds 24 months of basic salary
- For most employees with careers under 26 years, the cap is never reached
- The cap is based on basic salary only — allowances and bonuses are excluded
- Employers who apply the cap to a below-cap gratuity are underpaying and can be reported to MOHRE
- The cap applies equally to resignation and termination — there is no distinction
- Disputes are resolved through MOHRE complaint or Labour Court
Use our free UAE Gratuity Calculator to see your exact entitlement, confirm whether the cap affects your calculation, and generate a PDF of your result to keep as a record before your final settlement discussion.
For a full breakdown of how gratuity accumulates year by year — including a complete table from 1 to 25 years of service — see our guide on UAE gratuity calculation by years of service.
Disclaimer: This article is for informational purposes and reflects Federal Decree-Law No. 33 of 2021 as in force in July 2026. It does not constitute legal advice. For complex situations or disputed payments, consult a qualified UAE employment lawyer or contact MOHRE at mohre.gov.ae.
