Resigning does not cut your gratuity. That rule died in 2022.

A man resigns from a Dubai company after three years. HR hands him a settlement and explains, politely and confidently, that because he resigned rather than being terminated, he receives a third of his gratuity. He signs. He was owed three times that amount.

This happens constantly, and it is not always dishonesty. The rule the HR manager is quoting was real, it applied for forty-one years, and a great deal of what is written online still describes it as current. It stopped applying on 2 February 2022.

What the old rule said

Under Federal Law No. 8 of 1980, an employee on an unlimited contract who resigned was penalised on a sliding scale:

There was also a distinction between limited and unlimited contracts that produced different outcomes for the same length of service. Both the penalty and the distinction are gone.

What applies now

Federal Decree-Law No. 33 of 2021 came into force on 2 February 2022. Article 51 sets a single formula for every private-sector expatriate worker with at least one year of continuous service:

• 21 calendar days of basic salary for each of the first five years
• 30 calendar days of basic salary for each year after that
• Calculated on your last basic salary, not your total package
• Capped at two years' wage in total
• Part years paid in proportion, once you have passed the one-year mark

Nothing in that formula depends on who ended the contract. Resignation, termination by the employer, and contract expiry all produce the same number. The law also abolished the limited and unlimited contract distinction entirely — all private-sector contracts are now fixed-term.

What this is worth in money

Take someone on AED 6,000 basic salary who resigns after three years. The daily rate is 6,000 ÷ 30 = AED 200. Three years at 21 days each is 63 days, so AED 12,600.

Under the repealed rule, resigning at three years would have paid one third of that: AED 4,200. The difference is AED 8,400 — more than a month of the full package for most people in that bracket. At five years on the same salary the gap is larger still.

The tell-tale signs of a settlement built on the old law

If any of these appear in what your employer has given you, the calculation is using rules that no longer exist:

• A figure described as "one third" or "two thirds" of gratuity
• Any reference to your contract being "limited" or "unlimited"
• A mention of Article 120, Article 137 or Article 138 — all from the repealed 1980 law
• A statement that you "forfeited" gratuity by resigning before five years

Ask for the calculation in writing, line by line, showing the daily rate, the number of days, and the article of law relied on. An employer applying the current law can produce that in a minute. One applying the old law usually cannot.

The one thing that genuinely can cost you

Article 44 lists the narrow grounds on which an employer may dismiss without notice — forgery, theft, assault, disclosure of confidential information, intoxication at work, and a handful of others.

Here the position is genuinely unsettled, and worth saying plainly rather than picking a side. The repealed 1980 law expressly wiped out gratuity for gross misconduct. The 2021 law contains no equivalent forfeiture clause in Article 51, and a substantial body of legal commentary now holds that an Article 44 dismissal does not automatically cancel gratuity — a court must order forfeiture, and the burden of proving the misconduct sits entirely with the employer. Other sources still state the older position.

What follows from that is practical: if you are dismissed on misconduct grounds and told your gratuity is gone, do not treat that as settled. Get advice before you sign. The money may well still be yours.

What is not disputed, and often forgotten

• Basic salary only. Housing, transport, commission and bonuses are excluded. If your AED 12,000 package has a basic of AED 6,000, your gratuity is built on the 6,000. This is lawful and extremely common — check your MOHRE contract before you calculate anything.
• One year minimum. Below twelve months of continuous service, nothing is payable, however close you are.
• Unpaid leave does not count towards service.
• Fourteen days to pay. All final dues, gratuity included, are due within 14 days of the contract ending.
• DIFC and ADGM are different. DIFC uses the funded DEWS scheme; ADGM has offered a choice between gratuity and a savings alternative since April 2025. If you work in either, the formula above does not apply to you.
• No tax. The UAE levies no personal income tax on the payment.

If your employer's figure is lower than it should be

Work through it in this order.

Get their calculation in writing. Not a total — the working. Daily rate, days accrued, the article relied on.

Check your own figure against the formula, using dates rather than a rounded number of years. Three years and seven months is not three years.

Do not sign a final settlement you disagree with. Signing makes recovering the difference considerably harder. There is no obligation to sign on the spot.

File with MOHRE if it cannot be resolved. The complaint process comes before the labour courts, it is free to start, and the limitation period for labour claims is two years from the end of the employment relationship. That is time to act, not time to wait.

The asymmetry here is worth naming. Your employer's HR team does this several times a year. You do it perhaps twice in a career. That gap, not bad faith, is why so many settlements go unchallenged — and it closes the moment you can show the arithmetic.

Sources

Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, in force 2 February 2022, Articles 44, 47, 51 and 52, as amended by Federal Decree-Law No. 9 of 2024 · Cabinet Resolution No. 1 of 2022 (Executive Regulations) · Federal Law No. 8 of 1980 (repealed), Articles 120, 137 and 138 · MOHRE guidance on end-of-service entitlements.