End-of-service gratuity is one of the most valuable financial entitlements for UAE employees, and one of the most commonly misunderstood when it comes to estate planning. Many expats assume it will automatically pass to their family or that their employer will handle it. In reality, it goes into the estate pool and is subject to the same legal process as any other asset.
What Is End-of-Service Gratuity?
End-of-service gratuity is a statutory payment made by UAE employers to employees at the end of their employment, whether that ends through resignation, termination, retirement, or death. It is calculated based on your final basic salary and years of service.
- First 5 years of service: 21 days' basic salary per year
- After 5 years: 30 days' basic salary per year
- Maximum cap: 2 years' total basic salary
- Payable in a lump sum on termination of employment
For a long-serving employee on a good salary, this can be a very significant sum, potentially AED 200,000–500,000 or more.
What Happens to Gratuity on Death
When an employee dies while still employed, their end-of-service entitlement becomes payable. The employer calculates what is owed and holds it pending legal instructions on who to pay it to.
The gratuity is treated as part of the deceased's UAE estate. Without a registered will, it is distributed according to Sharia inheritance law, the same as any other UAE asset. This means the courts determine who receives it, which takes time and may not reflect the employee's wishes.
Employers cannot release gratuity to a family member without legal authorisation. Without a will, that authorisation comes from a UAE court, and can take 12–18 months.
How a UAE Will Protects Your Gratuity
A registered will names your executor and beneficiaries, giving your employer and the relevant authorities clear legal instructions on who to pay. With a valid will, the process of releasing gratuity is significantly faster, your executor presents the will to the employer and the courts, avoiding a lengthy probate process.
You can also direct in your will that your gratuity specifically goes to your spouse, or that it be used to fund a specific need (such as your children's education), giving much more control than the Sharia default distribution.
Is Gratuity the Same as a Pension?
Most UAE private sector employees do not have a traditional pension, gratuity is the primary employer-funded retirement provision. Some employers offer DIFC-regulated occupational pension plans (like the DEWS scheme), which have their own beneficiary designation processes, separate from the estate. Check your employment contract and plan documents to understand how your specific pension or savings scheme treats death benefits.
Life Insurance and Gratuity
If you have a UAE life insurance policy with a named beneficiary, that pay-out typically passes outside the estate directly to the beneficiary, it does not go through probate. However, gratuity is an employer liability (not an insurance product) and is treated as part of the estate regardless of any insurance arrangements.
Make sure your gratuity, accounts, and property go to the right people. Register your UAE will from AED 749.
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Aanchal Adhikari (Advocate, LL.B., LL.M. (Cand.))
Senior Specialist & UAE Estate Planning Advocate
Aanchal Adhikari is a Nepal-licensed Advocate with 4+ years of legal practice, specialized in ADJD Wills, DIFC wills, and UAE inheritance. She has drafted and overseen 800+ ADJD Wills in the UAE and is currently pursuing an LL.M. at Middlesex University Dubai.
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