UAE Gratuity Deductions: What Can Legally Come Out of Your Final Payout
When you leave a UAE job, your end-of-service gratuity can only be reduced in limited cases set out in Cabinet Resolution No. 1 of 2022, which implements Federal Decree-Law No. 33 of 2021. Employers must follow the proper legal procedure before deducting anything, and your bank may have its own claim under your loan contract.
What Your Gratuity Is
You qualify after at least one year of continuous service with the same employer. The gratuity is 21 days of basic wage for each of the first five years, plus 30 days of basic wage for every year after that. It is based on your last basic wage, not your gross salary, and the total cannot exceed two years’ wage. Unpaid leave does not count towards your service.
Deductions an Employer Can Make
- Overpaid wages or an unpaid loan the employer granted.
- Retirement, end-of-service or insurance contributions you were legally required to pay.
- Penalties for violations under the company’s approved disciplinary regulations.
- Amounts you owe under a court judgment.
- Loss or damage to the employer’s tools, machinery, products or materials caused by your negligence or breach of instructions.
Deductions generally cannot be made more than three months after the amount became due, unless otherwise agreed. Gratuity disputes must be registered within two years of leaving the job. The law also bars employers from charging workers recruitment and employment costs, so those are not on the permitted list.
Can Banks Claim Your Gratuity?
Yes, if your loan or credit card agreement includes a clause allowing it. This comes from your contract with the bank, not from the labour law. It usually applies if you default or leave your job with debts outstanding, which is why a payout tagged as end-of-service money can be held.
| Question | Answer |
|---|---|
| Minimum service for gratuity | One continuous year |
| Rate, years 1 to 5 | 21 days’ basic wage per year |
| Rate, after year 5 | 30 days’ basic wage per year |
| Maximum | Two years’ wage |
| Time limit for employer deductions | Three months after the amount is due, unless agreed otherwise |
How to Protect Your Payout
- Ask for the final settlement as an itemised document and check every line against the list above.
- Contact your bank before your last day to arrange repayment on any loan or card.
- If a deduction looks wrong, raise it with MOHRE. See how to file a labour complaint.
To calculate the amount itself, read the UAE end-of-service gratuity guide and worked examples.
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