5 August 2026 · Dubai Employers
Gratuity for Dubai Employers
For a Dubai employer, gratuity is a liability to manage, not a bill to dread. Structure salaries with a clear basic-versus-allowance split, since gratuity runs off basic only, then accrue the cost monthly so it never lands as a lump. Plan the cash: a team of long-tenured staff can carry a six-figure end-of-service liability that most owners underestimate. Some employers ring-fence funds or use a savings scheme to cover it. Settle promptly and correctly at exit to avoid a MOHRE complaint. The employers who get caught out are the ones who never booked the accrual and treated gratuity as someone else's problem until a resignation letter arrived.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
Design the salary
The basic split drives the cost.
- Separate basic from allowances clearly.
- Gratuity runs off basic only.
- Keep contracts consistent with payroll.
- Document the wage split.
Plan for the liability
Do not let it surprise cash flow.
- Accrue the cost every month.
- Model the liability across the team.
- Ring-fence or scheme-fund if useful.
- Long tenure can mean six figures.
Pay correctly at exit
A clean exit avoids disputes.
- Apply the 21/30-day formula.
- Check the two-year cap.
- Pay promptly at end of service.
- Keep the calculation on file.
Related guides
Frequently Asked Questions
For Dubai business owners and HR.
How should an employer manage gratuity?
Split basic from allowances, accrue the cost monthly, plan the cash for the total liability, and settle correctly and promptly at each exit.
How do I reduce gratuity exposure legally?
Structure salaries with a clear basic-versus-allowance split, since gratuity runs off basic only. Do this transparently and in line with the contract, not as a disguise.
Can I fund gratuity in advance?
Yes. Some employers ring-fence funds or use a savings scheme so the end-of-service liability is covered rather than paid from working capital.
What if I do not accrue it?
You risk a cash shock when a long-tenured employee leaves and a distorted P&L. Accruing monthly keeps both the balance sheet and cash realistic.
What happens if I settle late or wrong?
The employee can file a MOHRE complaint, and a correctly calculated statutory claim is generally strong, so pay promptly and accurately.
Can Exiloz manage this end to end?
Yes. We set the wage split, run the monthly accrual, model the total liability, and calculate each final settlement.
Manage the liability
Exiloz structures, accrues and settles gratuity across your team.