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Gratuity is easy to calculate for one leaver and hard to manage for a whole workforce. Put the rules in payroll, post the provision every month, and settle leavers from data you already trust.
End-of-service gratuity software in the UAE holds the Labour Law rule once and applies it to every employee: 21 days' basic wage per year for the first five years and 30 days per additional year, capped at two years' wage. It tracks service dates and unpaid leave, posts a monthly provision to the ledger and produces final settlements payable within 14 days.
Most HR teams can work out one employee's gratuity on a spreadsheet. The problems start with scale: hundreds of joining dates, salary changes, unpaid leave, transfers between group companies, and a finance team that needs a reliable liability figure every month. End of service gratuity software UAE employers use should hold the rule once, apply it to every employee, and post the result to the books.
For private sector employees, gratuity is set by Article 51 of Federal Decree-Law No. 33 of 2021, the UAE Labour Law, which the Ministry of Human Resources and Emiratisation (MOHRE) oversees. The calculation uses the employee's last basic wage, not total package, which is why clean salary component data matters as much as the formula.
This page covers how an ERP or HR-payroll system handles the rule, the monthly accrual and the final settlement, and how that links to your WPS payroll run. It is written for HR managers and finance controllers who share ownership of the gratuity number.
These points summarise the published rules for private sector employees. They are general information, not legal advice: contract types, nationality and special arrangements can change the outcome, so confirm individual cases with your HR legal advisor or MOHRE.
An employee who completes at least one year of continuous service is entitled to gratuity when employment ends. Fractions of a year are paid in proportion once that first year is complete.
Gratuity is 21 days' basic wage for each of the first five years of service and 30 days' basic wage for each additional year. It is based on the last basic wage, excluding allowances such as housing and transport.
Total gratuity cannot exceed two years' wage. The system should stop accruing once the cap is reached and show HR when that happens.
Employers pay outstanding wages, entitlements and gratuity within 14 days of the end of the employment contract. Final settlement should be ready before the last working day, not after.
Cabinet Resolution No. 96 of 2023 created a voluntary alternative end-of-service benefits scheme, run with MOHRE and the Securities and Commodities Authority, where employers pay into approved funds. Companies that join need payroll to track contributions instead of, or alongside, accruals.
General information, not tax or legal advice. Rules change; confirm current FTA, MOHRE and Ministry of Finance guidance with your advisor.
Work through this list before relying on system-calculated gratuity. Most errors we find come from data, not formulas.
The same data drives the monthly accrual and the final payment, so the two never tell different stories.
One shared database: every step updates stock, finance and reports in real time.
All four can calculate UAE gratuity when configured. The amount of pre-built support differs, so confirm against the current version and edition you are licensing.
| Zoho Payroll | Odoo Payroll | ERPNext (Frappe HR) | Dynamics 365 | |
|---|---|---|---|---|
| Gratuity rule | UAE edition includes end-of-service handling | Salary rules, with UAE localization content in recent versions | Gratuity rule doctype with slab settings | Usually through a partner payroll solution or extension |
| Monthly accrual | Reports and journals to Zoho Books | Salary rule posting to accounting | Salary components or journal entries | Depends on the payroll solution chosen |
| Final settlement | Final settlement workflow | Configurable end-of-contract payslip | Full and final statement | Depends on the payroll solution chosen |
| WPS output | WPS file generation in the UAE edition | WPS file via localization or module | WPS file via app or custom report | Via payroll solution or bank integration |
| Best fit | SMEs already on Zoho Books or Zoho People | Companies running HR and accounting in one Odoo database | Teams wanting open-source control of rules | Larger groups that use a specialised payroll add-on |
Test the configured rule against a handful of real past settlements before go-live.
Typical ranges when gratuity is added to an existing payroll setup. A full HR and payroll implementation includes these steps within a longer plan.
Durations are typical ranges; your plan is agreed after discovery.
We split basic wage from allowances, confirm service dates and load unpaid leave history.
The gratuity rule, cap and accounting entries are configured and reviewed with HR and finance.
We compare system-calculated liability per employee to your current provision and explain differences.
We support the first monthly accruals and the first final settlements processed in the system.
Gratuity connects payroll, WPS and the ledger.
On-site workshops in Dubai, Abu Dhabi and Sharjah, and remote or on-site delivery across the Northern Emirates and free zones.
Official sources and references
Facts on this page were checked against these sources in October 2026. Rules change, so confirm current requirements before acting.
Still have a question? Our consultants are happy to help.
Ask an ExpertOn the last basic wage. Allowances such as housing and transport are excluded. That is why the system must hold basic wage as its own component; a single total salary figure makes accurate gratuity impossible.
Most companies do, because it gives a true liability on the balance sheet and avoids a large charge when someone leaves. Your auditors will advise on the accounting standard and method; the ERP then posts the agreed figure automatically.
It depends on whether service is treated as continuous and how the transfer was documented. Record the original service date and the transfer date separately, and confirm the treatment with your legal advisor before configuring the rule.
UAE nationals in the private sector are generally covered by the pension and social security system, and rules differ from expatriate gratuity. Configure separate rules by employee category and confirm the treatment with your advisor.
Yes, if configured. Employers in the scheme pay contributions into approved funds, so payroll needs a contribution component and a payment process instead of, or alongside, a gratuity accrual. Keep both visible in reports during any transition.
Recalculate a sample of recent leavers manually and compare. Include long-service employees near the cap, people with unpaid leave and anyone who transferred between entities.
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Send us an anonymised employee list and we will show how the system would calculate and post gratuity.
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