Ask around before resigning from a UAE job and someone will tell you that you will lose part of your gratuity for leaving voluntarily. It is one of the most persistent pieces of outdated advice in the country, and it costs people real money — either because they stay in a job they want to leave, or because they accept a settlement calculated on a rule that was repealed years ago.
What the old rule said
Under the previous labour law, an employee on an unlimited contract who resigned received a reduced gratuity:
- One to three years of service — one third of the normal entitlement
- Three to five years — two thirds
- Over five years — the full amount
An employee who was terminated received the full amount at every band. The rule existed to discourage job-hopping, and it worked mainly by trapping people in roles they had outgrown.
What changed
Federal Decree-Law No. 33 of 2021 came into force on 2 February 2022 and abolished that reduction outright. It also removed the unlimited-contract structure the rule depended on, moving the whole private sector to fixed-term contracts.
The position now is simple. Complete one year of continuous service and you receive the same gratuity whether you resign, are terminated, or your contract simply expires: twenty-one days of basic salary per year for the first five years, thirty days per year thereafter, capped at two years of basic salary.
Why the myth survives
Outdated online calculators. A striking number of UAE gratuity calculators still ask whether your contract is "limited or unlimited" and whether you resigned or were terminated, then apply the one-third and two-thirds fractions. Those categories have not existed since 2022. If a calculator asks you those questions, it is running pre-2022 logic and its output is wrong.
HR departments working from old templates. Settlement spreadsheets built before 2022 and never revisited will still contain the reduction. This is usually inertia rather than bad faith, but the money is gone either way if nobody checks.
Advice passed between colleagues. The rule was real for a long time and people repeat what they were told when they arrived.
What is still true
Two things do genuinely reduce or remove gratuity, and they get conflated with the abolished resignation rule:
- Under one year of service. No gratuity entitlement arises at all below twelve months of continuous service.
- Dismissal for gross misconduct under Article 44. This is a narrow list of serious grounds, not a general power for an employer to withhold gratuity because they are unhappy about a departure.
Unpaid leave is also excluded from your service period, which reduces the figure slightly without being a penalty as such.
If you have already been underpaid
If you left after February 2022 and your settlement applied a resignation reduction, that was incorrect. Raise it with your former employer in writing with the calculation, and take it to MOHRE if it is not corrected. The fourteen-day payment deadline applies to the correct amount, not the amount they chose to pay.
Work out what you should have received with the Gratuity Calculator — it applies the current law with no resignation reduction — or use the Final Settlement Calculator for the whole settlement including leave and notice.
General information, not legal advice. DIFC and ADGM have separate employment legislation.