Gratuity or savings scheme contributions, what is the difference?
Both work from your basic salary. Gratuity is paid as a lump sum at the end. The scheme puts money into a fund every month, and the fund's returns and fees change the final figure.
What does the comparison assume?
- The same basic salary for every month. Gratuity uses your last basic salary, so a pay rise raises gratuity for all your years, while contributions follow the salary of each month.
- Gratuity: 21 days a year for five years, then 30 days a year, capped at two years of pay, with no gratuity before one year.
- Contributions: 5.83% a month to five years of service, then 8.33%. If your job ends within its first year, your employer can take its contributions back.
- No investment returns, no fees and no voluntary top-ups. A fund without capital protection can also lose value on the money you choose to put in it.
| Years | Labour Law gratuity | Scheme contributions | Contributions minus gratuity |
|---|---|---|---|
| 3 | AED 21,000 | AED 20,988 | AED -12 |
| 5 | AED 35,000 | AED 34,980 | AED -20 |
| 7 | AED 55,000 | AED 54,972 | AED -28 |
| 10 | AED 85,000 | AED 84,960 | AED -40 |
| 20 | AED 185,000 | AED 184,920 | AED -80 |
Whether you join is your employer's choice. See the savings scheme and end of service gratuity.
Sources
- Federal Decree-Law No. (33) of 2021 Regulating Labour RelationsUAE Legislation. In force from 2 February 2022, as amended to 29 July 2024. Articles 51, 53, 54 and 67. Read 12 November 2026.
- Cabinet Resolution No. (96) of 2023 Concerning the Alternative Voluntary End of Service SchemeUAE Legislation. Issued 10 October 2023. Articles 6, 7, 9 and 10. Read 12 November 2026.