An employee is about to finish their first year — how exactly is end-of-service gratuity calculated?

Under Article 51 of the Labour Relations Law (Federal Decree-Law No. 33 of 2021), a full-time foreign worker becomes entitled to end-of-service gratuity once they complete at least one continuous year of service. The calculation is based on the last basic wage (excluding housing, transport, or other allowances), at a rate of 21 days' wage for each of the first five years of service, and 30 days' wage for each year beyond that, with partial years calculated proportionally. The law sets an explicit cap: total gratuity cannot exceed two full years' wage, no matter how long the service period runs.

One important point that changed under the current law: there is no longer a reduced gratuity for an employee who resigns before completing five years — that used to apply under the old law, but now the entitlement is the same whether the employee resigns or the employer ends the contract, as long as the one-year minimum is met. What matters for the books is that the company carries a running gratuity provision, recognised periodically, rather than being hit with it as one large expense line when service actually ends. RASEEKH calculates that provision monthly as part of your bookkeeping, so the number is ready before you need it.