End-of-service gratuity in the Gulf: how it is calculated
How Saudi Arabia, the UAE, Qatar, Kuwait and Bahrain calculate the gratuity paid when employment ends, and what changes if you resign.
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What the gratuity is
An end-of-service gratuity is a lump sum an employer pays when an employee leaves after a period of service. In most Gulf states it is set by the labour law rather than by the contract, which means a contract can improve on it but cannot reduce it below the legal minimum.
The amount depends on three things: how long you worked, your last wage, and how the employment ended. Each country defines these slightly differently, which is why the same salary and the same years of service can produce different figures in Riyadh, Dubai and Doha.
The basic pattern
Most schemes pay a fraction of a month’s wage for each year of service during the first years, and a full month for each year after that. Saudi Arabia pays half a month per year for the first five years and a month per year afterwards. Bahrain uses the same idea with a three-year first band. Kuwait uses half a month for the first five years and a month after, but caps the total at 18 months of wage.
The UAE and Qatar count in days. The UAE pays 21 days of basic wage per year for the first five years and 30 days per year afterwards, requires at least one year of service, and caps the total at two years of wages. Qatar pays 21 days of basic wage per year and also requires a year of service. Periods shorter than a year are normally paid in proportion.
Which wage is used
In Saudi Arabia, Kuwait and Bahrain the last total wage, including regular allowances, is normally the base. In the UAE and Qatar the basic wage is used, which can be much lower than your total package. Because this choice changes the result by thousands, check how your contract splits basic pay from allowances.
Resignation and termination
When the employer ends the contract, or a fixed-term contract expires, the full gratuity is normally due. When the employee resigns, some countries reduce it. Saudi Arabia pays nothing for less than two years of service, a third for two to five years, two thirds for five to ten years and the full amount after ten. Kuwait pays nothing under three years, half for three to five years, two thirds for five to ten and the full amount after that.
The End-of-Service Gratuity Calculator lets you choose the country and the reason for leaving so you can see the effect. Treat the result as an estimate: laws are amended, public-sector staff and free zones follow other rules, and your company may offer more. Confirm the final figure with the official labour authority or your employer before relying on it.