UAE Final Settlement Calculator

How is a UAE final settlement calculated?

Your settlement under UAE Labour Law (Federal Decree-Law No. 33 of 2021) brings together everything owed when employment ends. Each component has its own basis, which is why a single figure quoted without a breakdown is difficult to check:

• End-of-service gratuity — 21 days of basic pay for each of the first five years and 30 days for each year after that, capped at two years' basic wage.
• Leave encashment — unused annual-leave days × the daily wage.
• Pending salary — earned up to the last working day.
• Notice pay — where the notice period is paid rather than worked.
• Less deductions — outstanding loans, advances and any notice shortfall.

Worked example — a five-year exit

Worked example — an exit before the five-year mark, with notice not served

Worked example — an exit past the five-year mark, employer terminated with notice paid in lieu

For a gratuity-only figure, use our UAE Gratuity Calculator; for leave alone, the Leave Salary Calculator handles accrual and encashment in more detail.

Notice periods

Where notice is not worked, the settlement is normally adjusted for it — as payment in lieu where the employer terminated without notice, or as a deduction where the employee left early. The length of notice and the compensation due are set by the contract and the law, so check the contract wording and confirm the position with MOHRE if it is disputed.

Employment continues during a worked notice period, so leave keeps accruing and the service used for gratuity keeps running to the last day.

The arithmetic is the same in both directions; only the sign changes. Take a 30-day notice period and a daily rate of AED 316.67. If the employer ends the contract and asks the employee not to work the notice, the statement carries 30 × 316.67 = AED 9,500 as an addition. If the employee resigns and leaves after 10 days, the statement carries the 20 unserved days, 20 × 316.67 = AED 6,333.33, as a deduction, while the 10 days worked are paid as salary. Where the two sides agreed to waive the notice, nothing is added or deducted, and that agreement is worth having in writing because it is the item most often remembered differently later.

What an employer may deduct

The UAE Government states that an employer may deduct amounts the employee owes from the gratuity — in practice, items such as an outstanding staff loan or salary advance. Deduction is not a general right of set-off. Where an amount is disputed the route is MOHRE rather than unilateral withholding, and it is reasonable to ask for the settlement broken down component by component before signing anything.

Staff loans and salary advances are the usual deductions. The law allows an employer to recover a loan it granted to the worker, with the worker's written agreement, and the law and its implementing regulation limit how much of a month's wage can be taken in deductions. On a final settlement the remaining balance is normally recovered in one step, because there is no further wage to spread it over. What matters for the statement is that each deduction names the agreement it comes from and shows the running balance: the amount lent, the instalments already recovered through payroll, and the balance being taken now. An advance is simpler, since it is salary paid early, but it should still appear as a line with a date rather than inside a single deductions total.

The 14-day rule

The employer must settle wages and entitlements within 14 days of the end of the contract. The obligation runs from the contract ending, and is not conditional on the employee first signing a full-and-final receipt. Being asked to sign before seeing the calculation is worth questioning, and a breakdown by component is a reasonable thing to ask for.

Where payment does not arrive, the route is a written request to the employer, then a complaint to the Ministry of Human Resources and Emiratisation, which handles private-sector labour disputes and refers unresolved matters onward. Keep the contract, payslips and correspondence.

The Ministry's process starts with an attempt at an amicable settlement between the two sides. Where that fails, smaller claims can now be decided by the Ministry itself under a 2023 amendment to the law, and larger ones are referred to the labour court. Two practical points follow. First, the complaint is stronger when it is specific: a statement of the components you believe are owed, with the contract, payslips and leave record attached, is easier to act on than a total. Second, do not sit on it. The law sets a time limit on labour claims, so a settlement that has not arrived a few weeks after the 14 days should be raised rather than waited for. This page does not quote a late-payment penalty because the law does not set a fixed one for this situation; a court can award what it finds due.

Visa cancellation and the return ticket

Cancellation of the work permit and the residence visa is an immigration process that the employer initiates, and the payment obligation does not wait for it. Employees are often asked to sign the cancellation and a full-and-final receipt at the same meeting. Signing the cancellation is not the same as agreeing the figure, and it is reasonable to ask for the breakdown before signing either. Where the exit is amicable the sequence rarely matters; where it is not, keeping the two documents separate protects both sides.

The return ticket is the component most often left off a settlement statement. As a starting point the employer bears the cost of the worker's return to the place of recruitment, or to another place the two sides agreed, unless the worker moves to another employer in the UAE. The implementing regulation treats some exits differently, so this is a starting point rather than a fixed rule. If a ticket is due, the statement should say whether it is being provided or reimbursed, and at what cost.

What a settlement statement should show

A statement that can be checked has one line per component and shows the basis for each. The list below is the minimum worth asking for; a payroll system that holds the underlying records produces it without extra work.

• Service dates — joining date, last working day, and whether the notice period was worked, waived or paid in lieu.
• Salary basis — the basic monthly salary and the daily rate derived from it, with the divisor shown.
• Gratuity — days in the 21-day band, days in the 30-day band, the pro-rated fraction, the resulting amount and a note that the two-year cap was checked.
• Leave — days accrued, days taken, the balance encashed, and the salary basis used for the encashment.
• Pending salary — the period covered and the amount, or a note that the final month was paid through payroll.
• Notice pay — the number of days, whether added or deducted, and the basis used.
• Other earned items — unpaid overtime, commission already earned, approved expense claims, each as its own line.
• Deductions — each item named, with the agreement or advance it comes from and the balance being recovered.
• Return ticket — where it applies, whether provided or reimbursed, and the amount.
• Net payable and due date — the total after deductions and the date it falls due, being 14 days after the contract ended.

How to check a settlement statement before you sign it

Most disputes we hear about are not disagreements over the law. They are cases where one side produced a single number and the other side had no way to test it. A settlement that arrives as a breakdown can be checked in a few minutes, and the checks do not change from one statement to the next.

1. Confirm the service dates. Gratuity runs from the joining date to the last day of the contract, and a worked notice period is part of that service. A statement that stops the clock at the resignation letter rather than the last working day produces a shorter service period than the one actually served.
2. Check which salary figure was used. Gratuity is calculated on basic salary, not total package — housing, transport, utilities and similar allowances sit outside it. If the statement shows a daily wage, work backwards from it and see which salary it came from.
3. Check the daily-wage divisor. Dividing the monthly basic by 30 is the usual convention. A different divisor changes each line that depends on a daily rate, so it is worth establishing once rather than per component.
4. Test the year bands. Twenty-one days apply to each of the first five years and thirty days to each year after that. On a service length that straddles the five-year mark, check that only the years beyond it were paid at the higher rate.
5. Reconcile the leave balance. Compare the days encashed against your own record of leave taken. Leave keeps accruing through a worked notice period, and public holidays falling inside a leave period are treated as part of that leave rather than as extra days.
6. Ask for deductions to be itemised. A single "deductions" line is not checkable. Each amount should name what it is for, and you should be able to match it to a loan agreement, an advance, or an unserved notice period.

If a component is missing rather than wrong — unpaid overtime, an approved expense claim, a commission already earned — raise it while the statement is still a draft. It is a different conversation once the payment has been made.

Where the two sides usually disagree

These are the recurring points. None of them is unusual, and most come from the two sides working from different records rather than from anyone acting in bad faith.

For an employer, the underlying problem is usually record-keeping rather than intent: service dates in one place, leave balances in another, advances in a third. Where those sit in one system the settlement is an extract rather than a reconstruction. That is what Avance HRMS is for, and it is also why we publish the arithmetic here rather than only the tool.