How to Calculate Gratuity Manually in the UAE (Formula + Free Excel Template)

If you’d rather work out your gratuity by hand, or you’re an HR or finance professional who needs to see the actual formula logic instead of a black-box result, this guide walks through the manual calculation step by step — with a free downloadable spreadsheet template you can reuse for any employee.

Download the free UAE Gratuity Manual Calculation Template (CSV, works in Excel & Google Sheets)

The Manual Calculation Method, Step by Step

1. Find your total days served. Subtract your first working day from your last working day to get the total number of calendar days.
2. Convert days to years. Divide total days by 365. This is the convention used for UAE gratuity calculations — not 360, and not calendar-year counting.
3. Calculate your daily wage. Divide your basic monthly salary by 30.
4. Calculate gratuity for the first 5 years. Daily wage × 21 × the number of years served, capped at 5.
5. Calculate gratuity for years beyond 5. Daily wage × 30 × (years served minus 5), if applicable.
6. Add the two figures together for your total gratuity under a limited contract or a legacy unlimited contract termination.
7. Apply the resignation multiplier if you’re on a legacy unlimited contract and resigning within your first 5 years (see below).
8. Apply the 2-year cap. Your final total cannot exceed 24 months of your basic salary.

Worked Example: Excel-Style Calculation

Basic salary: AED 15,000. Joined: 20 September 2021. Last working day: 25 March 2024. Contract: limited.

• Total days served: last working day − first working day
• Total years served: total days ÷ 365 ≈ 2.51 years
• Daily wage: 15,000 ÷ 30 = AED 500
• Gratuity: 500 × 21 × 2.51 ≈ AED 26,355

A second example with more than 5 years of service, same basic salary, joined 14 August 2018, left 25 March 2024 (approximately 5.62 years):

• First 5 years: 500 × 21 × 5 = AED 52,500
• Remaining 0.62 years: 500 × 30 × 0.62 ≈ AED 9,300
• Total gratuity: 52,500 + 9,300 = AED 61,800

The Resignation Multiplier for Legacy Unlimited Contracts

If you’re on a legacy unlimited contract (started before February 2, 2022, not since renewed) and you’re resigning rather than being terminated, apply this multiplier to the first-5-years portion only, before adding the years-beyond-5 portion:

• Under 1 year: Multiplier = 0 (no gratuity)
• 1–3 years: Multiplier = 1/3
• 3–5 years: Multiplier = 2/3
• Over 5 years: Multiplier = 1 (full entitlement)

For the full explanation of when this multiplier applies to you, see our guide on limited vs unlimited contract gratuity.

Common Manual Calculation Mistakes

• Using 360 or 30-day months to count years served instead of the standard 365-day year convention.
• Forgetting to cap the total at 24 months’ basic salary for long-tenured, high-salary employees.
• Using gross salary instead of basic salary in the daily wage formula — by far the most common error.
• Applying the resignation multiplier to a limited contract, where it does not apply at all.
• Rounding too early in multi-step calculations, which compounds small errors across the full formula.

When to Use the Spreadsheet vs. the Online Calculator

The downloadable template above is useful if you’re calculating gratuity for multiple employees at once, want to see the formula logic transparently, or need to keep an auditable record for HR or payroll purposes. For a single quick estimate, the UAE Gratuity Calculator on this site gives you the same result instantly with a year-by-year breakdown, without needing Excel or Google Sheets open.

Frequently Asked Questions