End of Service Benefits Dubai 2025: Complete Employee Guide
June 25, 2025
September 24, 2025
June 25, 2025
September 24, 2025
Topic Summary
1. Understanding the Fundamentals of End of Service Benefits
End of service benefits (EOSB) in Dubai constitute a lump sum payment that employees receive upon termination of their employment contract, provided they have completed at least one year of continuous service. These benefits are mandated under UAE labour law to ensure financial protection for employees leaving their job, serving as a form of gratuity.
2. Calculation of Gratuity under UAE Labour Law
The gratuity payment is calculated based on the length of service and the employee’s last basic salary, excluding allowances and bonuses. For the first five years of service, employees are entitled to 21 days' wages for each year worked. For any period beyond five years, the entitlement increases to 30 days' wages per year of service, with the total gratuity capped at two years’ wages.
3. Recent Legal Amendments Impacting End of Service Benefits
In 2022, amendments to the UAE Labour Law introduced greater flexibility concerning EOSB, including provisions for updated contract structures and end of service calculation methods, aligning more closely with international employment practices. Employers operating in Meydan Free Zone must stay updated on these changes to ensure compliance and correct benefit calculation.
4. Implications for Businesses in Meydan Free Zone
Employers in Meydan Free Zone must adhere to the Federal Labour Law’s guidelines while also considering the free zone’s specific labour regulations. It is crucial for founders and business owners to incorporate accurate EOSB provisions in their employment contracts to avoid disputes and ensure smooth employee transitions as the business scales.
5. Practical Considerations for Employers and Employees
Employers should maintain meticulous records of employee service periods and salary details to facilitate precise EOSB calculations. Employees are advised to understand their entitlements fully and to clarify their contract terms with their employers. Both parties benefit from transparent communication to mitigate any confusion regarding end of service payments.
End of service benefits in Dubai are a key part of employee protection under UAE labour law. Whether you're a founder hiring your first team or scaling across the region, understanding these employee benefits in Dubai is essential. This guide explains how gratuity works, recent legal changes, and what it means for your business setup at Meydan Free Zone.
Understanding End of Service Benefits in Dubai
End of service benefits are lump-sum payments employers must provide to full-time employees upon contract termination. Governed by Federal Decree-Law No. 33 of 2021, they serve as a financial safety net for workers, especially expatriates, when changing jobs or exiting the country.
For expat workers, it’s the primary retirement-type benefit. For UAE nationals, this is supplemented by national pension schemes. Companies in Meydan Free Zone must follow the same framework for any private sector employment.
Eligibility Criteria for Gratuity Under UAE Labour Law
To qualify for end of service benefits:
- Minimum one year of continuous full-time service
- Applies to both limited and unlimited contracts (all now transitioned to limited term by 2025)
- Excludes employees dismissed for serious misconduct (e.g. theft, fraud, violence, or job abandonment)
Meydan Free Zone supports founders by maintaining accurate employment and HR records to ensure eligibility compliance is met.
Gratuity Calculation Formula: What You Need to Know
The end of service benefit amount is based on basic salary only, excluding allowances like housing or transport.
Calculation Breakdown:
- Years 1–5: 21 days’ basic salary per year
- Beyond 5 years: 30 days’ basic salary per additional year
- Cap: Maximum of two years’ salary
Example:
With Meydan Free Zone’s all-in-one dashboard, you can calculate gratuity instantly and store records digitally.
Other Important Factors in End of Service Benefits
- Unpaid Leave: Does not count towards years of service.
- Paid Leave: Maternity and sick leave are included.
- Payment Timeline: Must be settled within 14 days of final working day.
At Meydan Free Zone, this process is streamlined via automated compliance tools that keep you ahead of deadlines.
Legal Updates to End of Service Benefits in 2025
Key Reforms:
- All contracts now limited term (max 3 years)
- Heavy fines (AED 100,000–1,000,000) for non-compliance
- Mandatory unemployment insurance from January 2023
These changes are embedded into Meydan Free Zone’s HR and business licensing ecosystem, reducing your admin load.
New Options: Alternative Savings Schemes for Gratuity
Besides the traditional system, employers at Meydan Free Zone can explore modern savings-based schemes:
Alternative End-of-Service Benefits (ESOB):
- Monthly employer contributions
- Funds invested in approved schemes
- Better long-term planning for employees
How Meydan Free Zone Helps You Stay Compliant
Meydan Free Zone offers:
- Gratuity calculators built into your license dashboard
- HR document management tools
- Real-time compliance alerts
- Help with employment contract updates as per 2025 law
- Access to vetted HR outsourcing partners who assist you with employee onboarding, exit processes, and benefits calculations, so you’re never caught off
guard.
This ensures you meet every UAE labour law requirement with no stress.
End of Service Rules for Meydan Free Zone vs Other Jurisdictions
Wherever your team operates, Meydan Free Zone ensures consistency and compliance across your employee benefits in Dubai.
Best Practices for Managing Gratuity at Your Startup
- Keep digital records of start dates, salary, and leaves
- Review limited-term contracts and renewal clauses
- Subscribe employees to job loss insurance
- Calculate gratuity regularly, not just at exit
All of these can be managed directly from your Meydan Free Zone license portal.
End of Service Benefits in Dubai Made Simple with Meydan Free Zone’s HR Support
If you're hiring in the UAE, knowing how end of service benefits in Dubai work isn’t optional, it’s a business must. From smart dashboards to automated alerts, Meydan Free Zone’s HR partners make managing employee benefits in Dubai seamless and compliant.
No guesswork, no stress. And when it comes to implementation, our dedicated HR partners guide you through every step, from contract structuring and policy alignment to accurate gratuity calculation and legal compliance. Whether you're hiring your first employee or scaling to 50+, you’re never alone in your HR journey.
FAQs
1. What are end of service benefits in Dubai and who is entitled to them?
End of service benefits in Dubai are mandatory lump-sum payments made to full-time employees upon contract termination. As per UAE labour law, employees who’ve completed at least one year of continuous service are eligible, whether under a limited or previously unlimited contract.
2. How are end of service benefits calculated under UAE labour law?
Under UAE labour law, the calculation depends on years of service and basic salary. Employees receive 21 days’ salary per year for the first 5 years, and 30 days per year after that, capped at two years’ salary. Meydan Free Zone’s dashboards automate this for easier planning.
3. Do end of service benefits in Dubai apply to employees in free zones like Meydan Free Zone?
Yes. Companies operating in Meydan Free Zone must comply with the same UAE labour law regulations regarding end of service benefits in Dubai, with added support like automated HR tools and access to vetted partners for accurate compliance.
4. What is the difference between end of service benefits and other employee benefits in Dubai?
End of service benefits are statutory payments due at the end of employment, while other employee benefits in Dubai may include health insurance, bonuses, or housing allowances. Gratuity is governed by law; others vary by company policy.
5. How does Meydan Free Zone help with managing end of service benefits in Dubai?
Meydan Free Zone simplifies the process with smart calculators, compliance alerts, and access to HR experts. From policy structuring to exit settlement, every stage of employee benefits in Dubai is supported, ensuring full alignment with UAE labour law.
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