Limited Contract Gratuity Calculator
Under current UAE Labour Law, all private sector employment contracts are standardized as fixed-term (limited) agreements. Calculate your exact statutory end-of-service benefits below.
Your Employment Details
UAE Labour Law Article 51 FormulaStatutory Calculation Breakdown
| Service Tier | Accrual Rate | Subtotal |
|---|---|---|
| First 5 Years (Years 1–5) | 21 days / yr | AED 35,000.00 |
| Additional Service (Year 6+) | 30 days / yr | AED 15,000.00 |
| Total Gratuity Payable | AED 50,000.00 | |
What Is a Limited (Fixed-Term) Contract in the UAE?
Decree-Law No. 33A limited (or fixed-term) contract is an employment agreement registered with the Ministry of Human Resources and Emiratisation (MOHRE) that defines a clear start date and expiration date.
Under Federal Decree-Law No. 33 of 2021, unlimited contracts were completely eliminated for private-sector hiring. Every employee in mainland UAE and non-financial commercial free zones now operates under a fixed-term contract structure.
While Decree-Law No. 33 originally capped contracts at a 3-year maximum, Federal Decree-Law No. 14 of 2022 removed this restriction. Employers and employees are now free to agree upon any contract duration (e.g. 1 year, 2 years, 3 years, 5 years, or custom project terms).
Limited Contract Gratuity Accrual Schedule (Article 51)
| Continuous Service Duration | Statutory Accrual Rate | Calculation Method | Maximum Cap |
|---|---|---|---|
| Less than 1 Year (0–11 Months) | 0 Days | No gratuity payable under Article 51 | N/A |
| 1 Year to 5 Years | 21 Days per Year | (Basic Salary ÷ 30) × 21 × Service Years | Max 24 months basic wage |
| More than 5 Years (Year 6+) | 30 Days per Additional Year | (5 × 21 Days) + ((Years − 5) × 30 Days) × Daily Basic | Max 24 months basic wage |
*Note: Unpaid leave days and unauthorized absences are legally deducted from total active continuous service prior to applying the formula.
Early Termination & Resignation Under a Limited Contract
Under previous labour regulations, early termination of a limited contract could trigger severe penalties (such as early termination compensation). Under current law:
Notice Period Requirement
Either party may terminate the contract at any time by serving written notice of between 30 and 90 calendar days, as stipulated in the MOHRE contract.
100% Gratuity on Resignation
Employees who resign after completing 1 continuous year receive 100% of their statutory gratuity without historical 1/3 or 2/3 reductions.
14-Day Payment Deadline
Under Article 53, the employer must settle all gratuity, leave pay, and unpaid wages within 14 calendar days of the employee's last working day.
Limited Contract Questions & Answers
Official interpretations under UAE Federal Decree-Law No. 33 of 2021
How is gratuity calculated for a limited contract in the UAE?
Under Article 51 of Federal Decree-Law No. 33 of 2021, employees on limited (fixed-term) contracts receive 21 days of basic wage for each of the first five years of service, and 30 days of basic wage for each additional year beyond five years, provided they complete at least one full continuous year.
Is there a maximum duration for limited contracts in the UAE?
No. While Federal Decree-Law No. 33 of 2021 originally set a 3-year maximum duration, Federal Decree-Law No. 14 of 2022 removed the 3-year cap. Employers and employees can now agree on any contract length, renewable upon mutual agreement.
Do I get full gratuity if I resign from a limited contract?
Yes. Under current UAE Labour Law, if you have completed at least 1 continuous year of service, you are entitled to 100% of your accrued statutory gratuity upon resignation, provided you serve your contractual written notice period (30 to 90 days).
What happens if a limited contract is terminated before its end date?
Either party may terminate a fixed-term contract for a legitimate reason by providing written notice between 30 and 90 days. The employee remains entitled to full accrued gratuity (if they have completed 1 year) plus pay for unused accrued annual leave.
What if I work less than 1 year on a limited contract?
Under Article 51, employees who have completed less than 1 continuous year (12 months) of service are not entitled to end-of-service gratuity, regardless of whether employment ends via resignation, contract completion, or employer termination.
Is limited contract gratuity calculated on basic salary or gross salary?
Gratuity is strictly calculated using the employee's contractual basic monthly wage. Allowances such as housing, transport, utility subsidies, and bonuses are excluded from the calculation base.
What is the maximum limit on limited contract gratuity?
Article 51 establishes a statutory ceiling: total end-of-service gratuity cannot exceed two years' (24 months') worth of the employee's contractual basic wage.
How does contract renewal work for limited contracts?
A fixed-term contract can be renewed for the same or a different duration. If both parties continue working without a formal renewal document, the contract is legally deemed renewed under the same previous terms, and continuous service is preserved.