What Is End-of-Service Gratuity?
End-of-service gratuity (also called end-of-service benefit, severance pay, or terminal benefit) is a lump-sum payment that an employer owes to an employee when their employment ends. It is a legal entitlement in many countries - not a bonus or a gift. The amount is typically calculated based on the employee's basic salary and length of service.
Gratuity laws differ significantly from country to country. The formula, the minimum service period required, and the impact of resignation vs termination all vary depending on which country's labour law applies to your employment. This guide covers the seven countries supported by this calculator.
Country Comparison - Quick Reference
| Country | Min. service | Based on | Resignation penalty? |
|---|---|---|---|
| UAE | 1 year | Basic salary only | No (since 2022) |
| Saudi Arabia | 2 years (resignation only) | Last basic salary | Yes - tiered by years |
| Qatar | 1 year | Last basic salary | No |
| Kuwait | Varies by type | Last salary | Yes - tiered (see below) |
| Oman | Prorated | Last basic salary | No |
| Bahrain | 1 year | Last wage | No |
| India | 5 years | Last drawn salary | No |
This table shows the general rules. Exceptions, special cases, and recent law changes exist for each country - see the detailed sections below.
UAE - Federal Decree-Law No. 33 of 2021
How UAE gratuity is calculated
UAE gratuity is calculated on basic salary only - housing, transport, and other allowances do not count. For the first 5 years, the rate is 21 calendar days of basic salary per year. After 5 years, the rate increases to 30 calendar days per year for additional years. The total gratuity cannot exceed 2 years' total salary.
Resignation vs termination
Under the 2022 labour law reform (Federal Decree-Law No. 33 of 2021), employees who resign receive full gratuity with no reduction, regardless of contract type. The old system of limited vs unlimited contracts with resignation penalties has been replaced. Employees on older contracts may still be subject to the previous rules depending on when their contract was signed.
Key terms
Basic salary - the fixed amount in your contract, excluding allowances. MOHRE - Ministry of Human Resources and Emiratisation, the government body for labour disputes. DIFC and ADGM - free zones with their own employment regulations that may differ from federal law.
Saudi Arabia - Saudi Labour Law (Articles 84, 85, 87)
How Saudi gratuity is calculated
Saudi gratuity is based on the employee's last basic salary. For the first 5 years, the rate is half a month's salary per year. After 5 years, the rate increases to one full month's salary per additional year.
Resignation vs termination
Saudi Arabia applies a tiered reduction for resignation: employees who resign with 2–5 years of service receive one-third of their gratuity. With 5–10 years, they receive two-thirds. After 10 years, they receive the full amount. Employees who are terminated receive full gratuity regardless of service length (assuming no gross misconduct).
Qatar - Labour Law No. 14 of 2004
How Qatar gratuity is calculated
Qatar gratuity is calculated at 3 weeks' basic salary per year of service. There is no tiered rate - the formula is the same from year one onwards. Minimum qualifying service is 1 year.
Resignation vs termination
Qatar does not impose a resignation penalty. Employees who resign after completing their notice period receive the same gratuity as those who are terminated.
Kuwait - Kuwait Labour Law No. 6 of 2010
How Kuwait gratuity is calculated
Kuwait gratuity is calculated at 15 days' salary per year for the first 5 years, then one full month's salary per year after 5 years. The calculation varies by worker type - monthly-paid, weekly-paid, daily-paid, and piece-rate workers each have slightly different formulas.
Resignation vs termination
Kuwait applies a tiered reduction for monthly-paid workers who resign: under 3 years of service receives no indemnity; 3 to under 5 years receives 50% of the calculated gratuity; 5 to under 10 years receives two-thirds; and 10 years or more receives the full amount. Terminated employees receive the full gratuity regardless of service length. Different rules may apply for daily-paid, weekly-paid, and piece-rate workers.
Oman - Royal Decree No. 53 of 2023
How Oman gratuity is calculated
Under the 2023 labour law reform, Oman gratuity is calculated at one month's basic salary per year for monthly-paid employees, prorated for partial years. Oman is also transitioning to a Social Protection Fund (SPF) system expected to take effect in 2027, which may change how end-of-service benefits are structured for new employees.
Resignation vs termination
Oman does not impose a resignation penalty. Employees who resign receive the same gratuity as those who are terminated.
Bahrain - Labour Law No. 36 of 2012
How Bahrain gratuity is calculated
Bahrain gratuity is calculated at half a month's salary per year for the first 3 years, then one full month's salary per year after 3 years. Since March 2024, Bahrain has been transitioning to the Social Insurance Organisation (SIO) system. Employees enrolled in SIO may have their gratuity handled through the insurance system rather than as a direct employer payment.
Resignation vs termination
Bahrain does not impose a resignation penalty. Both resigning and terminated employees receive the same gratuity entitlement.
India - Payment of Gratuity Act, 1972
How India gratuity is calculated
India gratuity is calculated at 15 days' salary for each year of completed service, based on the last drawn salary. The daily rate uses 26 working days per month (not 30). The minimum qualifying service is 5 years - one of the longest thresholds among the countries covered here. The maximum gratuity payable is currently capped at ₹20 lakh (₹2,000,000), though this cap has been increased over time and may change.
Resignation vs termination
India does not impose a resignation penalty. Any employee who has completed 5 years of continuous service is entitled to gratuity, whether they resign or are terminated (except for termination due to gross misconduct).
Social Security Code 2020
India's Payment of Gratuity Act, 1972 has been incorporated into the Code on Social Security, 2020, which became effective from November 2025. The standard gratuity formula remains broadly similar, while fixed-term employees may qualify after one year of service. Because implementation details and rules may vary by state, verify with the Labour Commissioner or a qualified professional.
Key Factors That Affect Your Gratuity
Basic salary vs total salary. In the UAE, gratuity is calculated on basic salary only - allowances do not count. In some other countries, the full salary is used. This distinction can significantly affect the amount.
Resignation vs termination. In Saudi Arabia and Kuwait, resigning reduces your gratuity. In the UAE (since 2022), Qatar, Oman, Bahrain, and India, resignation does not reduce your entitlement.
Years of service. Most countries use tiered rates that increase after a threshold (typically 3 or 5 years). Partial years are usually prorated.
Contract type. In the UAE, old limited vs unlimited contract distinctions may still apply to pre-2022 contracts. In Kuwait, the formula varies by how the worker is paid (monthly, weekly, daily, or piece-rate).
Free zone status. Employees in certain free zones (such as DIFC or ADGM in the UAE) may be covered by different employment regulations than the federal labour law.
Unpaid leave. Extended unpaid leave may not count toward years of service in some jurisdictions.
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Open Gratuity Calculator - Free & Instant →Last reviewed: June 2026. Labour laws change - verify with the relevant labour authority before relying on any estimate.