UAE and Saudi Arabia both require employers to pay end-of-service gratuity, but the systems differ in three important ways: what counts as wage, whether there’s a cap, and how resignation is treated. The UAE is now the more generous system for anyone who resigns, while Saudi Arabia can work out more generous for very long-serving employees since it has no cap.
The Core Formula Comparison of UAE and Saudi Arabia (KSA)
| UAE | Saudi Arabia | |
|---|---|---|
| Governing law | Federal Decree-Law No. 33 of 2021, Article 51 | Saudi Labor Law, Article 84 |
| Years 1–5 | 21 days’ wage per year | Half a month’s wage per year |
| Year 6 onward | 30 days’ wage per year | A full month’s wage per year |
| Wage base | Basic salary only | Actual wage (basic plus fixed allowances) |
| Cap | 2 years’ basic salary | No cap |
| Resignation (current law) | Full gratuity, same as termination | Reduced, based on tenure (see below) |
| Regulator | MOHRE | HRSD, via the Qiwa platform |
Wage Base: Basic Salary vs Actual Wage
This is one of the most consequential differences, and it works in Saudi employees’ favor. In the UAE, gratuity is calculated on basic salary only, with housing allowance, transport allowance, and other fixed benefits excluded entirely, no matter how large a share of total pay they represent. In Saudi Arabia, gratuity is calculated on the “actual wage,” which under Article 84 includes basic salary plus regular fixed allowances like housing and transport. For an employee whose package is heavily weighted toward allowances rather than basic salary, this single difference can mean a meaningfully larger gratuity base in Saudi Arabia than an equivalent role would produce in the UAE.
The Cap: Two Years vs No Cap
UAE gratuity is capped at two years’ basic salary, regardless of how long someone has worked. Saudi Arabia has no equivalent cap under Article 84. For most employees this difference won’t matter, since it only becomes relevant after roughly 15 or more years of service. But for genuinely long-tenured employees, the UAE cap can meaningfully limit a payout that would keep growing without limit under the Saudi system.
Resignation: The Biggest Practical Difference
This is where the two systems diverge the most, and it’s a reversal of how things used to work. Before 2022, the UAE had a resignation-reduction system similar to Saudi Arabia’s current one. That changed. Since February 2022, UAE resignation and termination are treated identically, full gratuity either way, as long as you’ve completed at least one year of service.
Saudi Arabia still runs the older-style tiered reduction system under Article 85:
- Under 2 years of service: no gratuity for resignation
- 2 to 5 years: one-third of the calculated award
- 5 to 10 years: two-thirds of the calculated award
- 10 years or more: full award, treated the same as termination
So a UAE employee resigning after 3 years today gets their full calculated gratuity. A Saudi employee resigning after 3 years gets only a third of theirs, unless one of Article 87’s exceptions applies.
Saudi Arabia’s Marriage and Childbirth Exception
Article 87 of the Saudi Labor Law carves out specific situations where a resigning employee gets the full award regardless of tenure, bypassing the tiered reduction above entirely. One of the most notable is for female employees: someone who resigns within 6 months of getting married, or within 3 months of giving birth, is entitled to the full gratuity award even if they haven’t reached the 10-year threshold. Force majeure ending the employment relationship is treated similarly. The UAE has no direct equivalent provision, largely because it doesn’t need one: since resignation and termination are already treated identically under current UAE law, there’s no reduced-resignation scenario for any exception to apply against.
Worked Comparison: The Same Resignation, Two Countries
To make the resignation difference concrete, here’s the same scenario calculated under each system.
UAE: AED 10,000 basic salary, resigns after 3 years
| Step | Calculation | Result |
|---|---|---|
| Daily wage | 10,000 ÷ 30 | AED 333.33 |
| 21 days × 3 years | 333.33 × 21 × 3 | AED 21,000 |
Saudi Arabia: SAR 10,000 actual wage, resigns after 3 years
| Step | Calculation | Result |
|---|---|---|
| Full calculated award (before reduction) | 10,000 × 0.5 × 3 | SAR 15,000 |
| Resignation reduction (2–5 year bracket) | 15,000 × 1/3 | SAR 5,000 |
Same tenure, same reason for leaving, dramatically different outcomes, purely because of which country’s resignation rules apply. This is the single most important thing to understand if you’re comparing job offers or planning an exit between the two markets.
Long Tenure: Where Saudi Arabia’s Lack of a Cap Shows Up
The UAE’s 2-year cap only becomes the binding limit after roughly 25 to 26 years of service on a typical salary, so it doesn’t affect most careers. But for genuinely long-tenured employees, it matters. Take a 28-year employee on a AED 15,000 basic salary in the UAE versus the same 28 years on a SAR 15,000 actual wage in Saudi Arabia, both terminated by their employer, so no resignation reduction applies in either case.
UAE: AED 15,000 basic salary, 28 years, terminated
| Step | Calculation | Result |
|---|---|---|
| Years 1–5 (21 days) | 21 × 5 × 500 | AED 52,500 |
| Years 6–28, 23 years (30 days) | 30 × 23 × 500 | AED 345,000 |
| Uncapped total | 52,500 + 345,000 | AED 397,500 |
The 2-year cap limits the actual payout to 15,000 × 24 = AED 360,000, meaning roughly AED 37,500 of the calculated entitlement is lost to the cap.
Saudi Arabia: SAR 15,000 actual wage, 28 years, terminated
| Step | Calculation | Result |
|---|---|---|
| Years 1–5 (half a month) | 0.5 × 5 | 2.5 months |
| Years 6–28, 23 years (1 month) | 1 × 23 | 23 months |
| Total months’ wage | 2.5 + 23 | 25.5 months |
AED and SAR aren’t directly interchangeable, but they’re close in value, both pegged near 3.7 to the US dollar. At this tenure, the Saudi system’s uncapped payout comes out numerically higher than the UAE’s capped one, even though the UAE’s per-year accrual rate is more generous earlier in a career. This is exactly the scenario where the cap difference stops being theoretical and starts being real money.
Eligibility and Contract Types
Both countries require a minimum service period before gratuity applies at all, though the exact threshold differs. In the UAE, one year of continuous service is the baseline for gratuity eligibility under any circumstance. In Saudi Arabia, gratuity technically accrues from day one under Article 84, but as the resignation table above shows, resigning with under 2 years of service in Saudi Arabia yields nothing in practice, while termination at any point still earns a payout. Both systems calculate a pro-rated amount for a partial final year, so leaving partway through a year doesn’t forfeit that period’s accrual in either country.
Where to Verify Each System
For the UAE, MOHRE is the regulator, and u.ae is a good official reference point alongside our own guides on this site. For Saudi Arabia, the Ministry of Human Resources and Social Development (HRSD) regulates end-of-service benefits, and Qiwa, Saudi’s official digital labour platform, is the direct equivalent of MOHRE’s online services, including an official end-of-service calculator you can use to check a Saudi figure independently.
FAQs
The UAE calculates gratuity on basic salary only with a 2-year cap, but pays full gratuity on resignation regardless of tenure since 2022. Saudi Arabia calculates gratuity on actual wage, including fixed allowances, with no cap, but still reduces resignation payouts on a tiered scale unless you’ve served 10+ years or qualify for a specific exception like marriage or childbirth.
It depends on your situation. For someone resigning within their first decade of service, the UAE is clearly more generous today, since there’s no reduction at all. For a very long-serving employee planning to stay 15, 20, or more years, Saudi Arabia’s lack of a cap could produce a larger total payout than the UAE’s capped system, especially combined with the broader actual-wage base.
Not as a specific carve-out, because it doesn’t need one. Since UAE resignation and termination already receive identical treatment under current law, there’s no reduced baseline for a marriage, childbirth, or force majeure exception to lift you out of. Those exceptions only matter in Saudi Arabia’s system because its default resignation treatment is reduced in the first place.
This page provides general information comparing UAE and Saudi Arabian gratuity rules and is not legal advice. Saudi labour law falls outside the scope of this site’s primary UAE focus, so for a specific Saudi calculation or dispute, confirm details directly through HRSD, the Qiwa platform, or a licensed Saudi labour lawyer.
For the full UAE formula and a working calculator, see the UAE gratuity calculator on the homepage.
For how the UAE’s own resignation rules changed in 2022, see our old law vs new law guide.