Gratuity & Contract Renewal in the UAE: Continuous Service (Article 38)

If your employment contract has been renewed one or more times with the same employer, your gratuity is not reset or calculated separately for each contract period. This page explains how continuous service is treated across renewals.

The Core Rule: Renewals Count as Continuous Service

Under UAE labour law, when a contract is renewed with the same employer, the time from all consecutive contract periods is added together to calculate your total years of service — there is no reset at renewal. This is commonly referenced under Article 38 of the Labour Law framework governing continuous employment.

Why This Matters

Gratuity increases meaningfully once you cross the 5-year mark, moving from a 21-day rate to a 30-day rate for every year beyond that point. If your service were incorrectly treated as resetting with each contract renewal, you could be wrongly denied that higher rate, or even wrongly assessed as under the one-year eligibility minimum after a renewal.

A Worked Example

An employee signs an initial 2-year limited contract, renews it for another 2 years, and then renews again for a further 2 years with the same employer — a total of 6 years. Their gratuity is calculated on the full 6 years of continuous service, not as three separate 2-year periods. This means they qualify for the 30-day rate for their 6th year, exactly as if they had signed one single 6-year contract from the start.

What If My Salary Changed at Renewal?

Gratuity is calculated using your most recent (final) basic salary, applied across your entire qualifying service period — not a blended average of your salary at each contract stage. This is standard practice even if your basic salary increased significantly between your first contract and your last.

Does This Apply If I Changed Job Titles or Departments?

Yes, as long as you remained employed by the same legal employer without a break in service, continuous service applies even if your role, title, or department changed during that time.

What If There Was a Gap Between Contracts?

If there was a genuine break in your employment (for example, you left the company and were rehired later after a gap), this may be treated as a new period of service rather than continuous employment, depending on the length of the gap and the specific circumstances. If you’re unsure whether a gap in your employment history affects your continuous service calculation, confirm directly with HR or MOHRE.

How to Verify Your Continuous Service

• Check your original joining date from your very first contract with the employer, not just your most recent renewal.
• Request a service letter from HR confirming your total continuous employment period.
• Use your original joining date and current basic salary in the UAE Gratuity Calculator for an accurate total.

Frequently Asked Questions