When an employee leaves a private-sector company in the UAE, the employer must calculate and pay all end-of-service dues, often called the final settlement or "full and final". Mistakes are common because several amounts come from different rules. This checklist walks through each item under the UAE Labour Law, Federal Decree-Law No. 33 of 2021.
1. Confirm the last working day and notice period
Under the Labour Law, the notice period agreed in the contract must be at least 30 days and no more than 90 days. Check whether the notice was served in full. If either side ends the contract without serving the notice, it must pay the other side compensation equal to the employee's wage for the notice period, or for the part of it that was not served.
The last working day sets the end of the service period for gratuity and the final salary cut-off.
2. Pay salary up to the last working day
Pay the wage for the days worked in the final month, including any approved overtime and allowances due under the contract. If you pay salaries through the Wage Protection System (WPS), include the final salary in your normal monthly WPS SIF file or a separate file, as your bank or exchange house requires.
3. Calculate end-of-service gratuity
An employee with at least one year of continuous service is entitled to gratuity, based on the last basic wage:
- 21 days' basic wage for each of the first five years;
- 30 days' basic wage for each additional year;
- fractions of a year paid pro rata, with unpaid absence days excluded from the service period;
- a maximum of two years' wage in total.
Since February 2022 the gratuity is the same whether the employee resigns or is terminated. Use our free UAE gratuity calculator to check the figure.
4. Pay for unused annual leave
If the employee has annual leave days that were earned but not taken, the employer must pay for them when the employment ends. The payment is calculated on the basic wage. Check your leave records carefully: the balance should reflect leave accrued, leave taken and any carry-forward allowed by your policy.
5. Apply only lawful deductions
The employer may deduct amounts the employee legally owes, such as an outstanding salary advance or loan, or an amount ordered by a court. Deductions must be permitted by the Labour Law and documented. Do not hold back the whole settlement while waiting for minor items such as returned equipment; resolve these separately and keep records.
6. Check repatriation
When the employment ends, the employer generally bears the cost of the employee's return ticket to their home country, unless the employee joins another employer in the UAE or the law provides otherwise. Confirm what applies before closing the file.
7. Pay within 14 days
All end-of-service dues must be paid within 14 days of the end of employment. Late payment can lead to a complaint to the Ministry of Human Resources and Emiratisation (MOHRE).
8. Close the file properly
- Prepare a settlement statement that lists each amount: final salary, gratuity, leave pay, notice pay and deductions.
- Have the employee acknowledge receipt.
- Complete the work permit cancellation and any visa steps through the official channels.
- Keep payroll, attendance and leave records for the period required by law.
Final settlement checklist
| Item | Based on | Check |
|---|---|---|
| Final month's salary | Contract wage | Days worked, overtime, allowances |
| Notice pay | Wage for unserved notice | Notice period in the contract (30 to 90 days) |
| Gratuity | Last basic wage | 21/30-day rules, pro rata, two-year cap |
| Unused annual leave | Basic wage | Accurate leave balance |
| Deductions | Amounts legally owed | Documented and lawful |
| Payment deadline | — | Within 14 days of the last day |
How software helps
Most settlement errors come from incomplete data: a missing unpaid leave day, an outdated basic salary or a leave balance kept in a spreadsheet. TopTimePro keeps attendance, leave and payroll in one system, so the final settlement uses the same records as every monthly payroll.
Last reviewed: October 2026. Source: UAE Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations and its Executive Regulations; MOHRE. This article is general information, not legal advice. Free zones such as DIFC and ADGM have their own employment laws.