What counts as basic salary?

What the law says

The labour law defines basic wage as “the wage specified in the employment contract, which is paid to the Worker in return for his work under the employment contract, on a monthly, weekly, daily, hourly or piece-meal basis, and does not include any other allowances or benefits in kind” (Federal Decree-Law No. 33 of 2021, Article 1).

Your full wage is a different thing. The same article defines it as the basic wage plus the cash allowances and benefits in kind in your contract. Gratuity is “calculated according to the basic wage” (Article 51(2)), so allowances are left out.

Which payments are left out

The UAE government’s official guidance gives examples: gratuity “will not include allowances such as housing, transportation, utilities, furniture etc.”

Anything your contract lists as an allowance or a benefit in kind is left out, whatever it’s called.

Finding your basic salary

Look for the amount your employment contract calls basic salary or basic pay. Many payslips show it on its own line, with allowances listed separately.

If your payslip shows only one total, check your contract or ask your HR team for the split. Use the basic figure in our gratuity calculator.

For example, if your payslip shows a basic salary of AED 8,000 and a housing allowance of AED 4,000, gratuity is worked out on AED 8,000.

Why it’s your last basic salary

The law says gratuity “shall be calculated according to the last basic wage received” for people paid by the month, week or day (Article 51(5)). So if your basic salary went up during the job, the most recent figure is the one used.

People paid by the piece are treated differently: the law uses an average daily wage for them (Article 51(5)). Our calculator doesn’t cover piece-rate pay yet.

If your contract promises more

The law sets the minimum. If your contract or your employer’s rules give you something better, such as gratuity on a higher figure, you’re owed what they say (Article 65(1)).