End-of-service gratuity calculator

The end-of-service gratuity is the one piece of statutory retirement provision a Gulf expatriate actually has, and it is frequently the single largest cash event of a Gulf career. It is also badly misunderstood: it accrues on the basic wage in three of the five states, on the whole package in the other two, and it stops accruing entirely in two of them. Every figure below is computed by Coastline's own projection engine from the statutory formula, on a flat AED 300,000 package with 60% treated as basic wage.

UAE gratuity by length of service

Federal Decree-Law No. 33 of 2021, Art. 51: 21 days of basic salary for each of the first five years of service, 30 days for each year thereafter, capped at two years' wage, and nothing payable below one year of continuous service. Housing, transport, utility and furniture allowances are excluded from the calculation. On a flat AED 300,000 package (60% basic, so AED 180,000 of basic wage):

The cap is the thing to notice. UAE accrual stops at 24 months of basic wage, which a career hits at 26 years — so AED 360,000 after 35 years is only AED 7,500 more than after 25. The last nine years of that career earn almost nothing in gratuity terms. If you are past the cap, the entitlement has stopped being a reason to stay.

The five Gulf states are not the same rule

Expressed in months of wage, which is the unit every statute is written in, and then as years of total final package so the five can be compared across five currencies:

The wage basis dominates everything else. Saudi Arabia's Art. 84 award (22.50 months at 25 years) and Bahrain's SIO scheme (23.69 months) accrue on the whole wage, so on a 60/40 basic-to-allowance package they are worth 1.88 and 1.97 years of pay respectively. The UAE, Qatar and Kuwait accrue on basic wage only, which cuts their headline months by 40% before any cap applies: 1.18, 0.88 and 0.90 years of pay. Two of them then cap as well — the UAE at 24 months, Kuwait at 18 — while Qatar, Saudi Arabia and Bahrain have no statutory ceiling at all, which is why the last column diverges so sharply over a 35-year career.

A practical corollary: in the three basic-only jurisdictions, how your package is split between basic salary and allowances changes your gratuity directly, and that split is a contractual term. A package that is 40% basic rather than 60% pays a third less gratuity for identical total pay.

Useful, and not a pension

It is worth being precise about the scale. Against the AED 7,240,000 that same person would need to retire at 55 on AED 300,000 a year, an AED 352,500 gratuity is 4.9% of the target — about 1.18 years of that spending. It arrives as one payment, it does not index after you leave, and there is no state pension behind it: the UAE's GPSSA, Kuwait's PIFSS, Saudi Arabia's GOSI and the Qatari scheme all cover nationals rather than expatriate employees. Treat the gratuity as a bonus that shortens the plan by a year, not as the plan.

Two more things a plan should account for. The lump sum lands in the year employment ends, which for most expatriates is also the year residency ends — so it may be received in one country and spent in another, and if that other country taxes income or gains, this projection does not model what happens next. And if you are a US citizen or green-card holder, remember that the United States taxes worldwide income by citizenship rather than residence: the gratuity is foreign-source compensation on a US return like any other, landing on top of that year's salary, and the Foreign Earned Income Exclusion has an annual ceiling that a large lump sum can easily exceed. A zero-tax jurisdiction is not tax-free for a US filer, and there is no foreign tax paid here to claim as a credit. Model it as a US taxpayer too, in the retirement calculator.

What the engine does and doesn't do with it

• Paid once, in the first retirement year, into the investment account, untaxed — employment ends and the entitlement crystallises. Service years are the working years in the projection plus any prior service you enter, so enter the years you have already served or the accrual starts from today.
• One continuous service record is assumed. A career break or a change of employer resets real service under every one of these statutes, and the engine does not model that. Two ten-year stints are worth considerably less than one twenty-year stint in the UAE, Kuwait and Saudi Arabia.
• Days are normalised on a 30-day month (21 days = 0.7 of a month). Kuwaiti practice computes the daily rate on a 26-day month, which is more generous, so the Kuwait figures here are conservative by roughly 15%.
• Saudi Arabia's resignation tiers are not modelled. The figures use the full Art. 84 award, which is the retirement case. Art. 85 pays only a third of it on resignation between two and five years of service and two thirds between five and ten, so a short-tenure resignation receives less than shown.
• Bahrain is modelled as the lump sum it becomes. Since 1 March 2024 the employer-paid gratuity has been replaced by monthly employer contributions to a Social Insurance Organisation fund — 4.2% of the monthly wage for the first three years of service and 8.4% thereafter — which the worker claims when employment ends. Annualised, that is the same accrual shape, and it is modelled as the claimable lump sum.
• A couple's entitlement uses combined final employment income, which is exact when both partners have the same tenure and optimistic otherwise. Model two very different tenures as separate scenarios.
• The other four jurisdictions get nothing, and nothing is invented. The Bahamas, Cayman, Monaco and Brunei have no service-based gratuity: the Bahamian Employment Act and the Cayman Labour Act provide severance on employer termination rather than a retirement entitlement, Monaco's retirement provision runs through the CAR and CCSS pension system, and Brunei's through the TAP and SCP schemes, which bind citizens and permanent residents. Switch to one of those four and the engine pays zero.

Assumptions above: a flat AED 300,000 annual package held level, 60% of it basic wage, zero inflation and zero investment return, so the statutory arithmetic on this page can be checked by hand against the labour law. Real gratuities are computed on your actual final wage. Every formula cited is carried on the engine's own jurisdiction record with its statutory instrument named; see the methodology page. Educational, not legal or tax advice — confirm your own entitlement against your contract and the current law.

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