Breakdown
How it works
UAE law calculates gratuity (21/30 days per year), leave encashment and overtime on basic salary only. Employers therefore keep basic low (40–60% of total) and pay the rest as housing and transport allowances. Moving basic from 40% to 60% of a AED 20,000 package raises gratuity after 8 years by AED 26,000.
Formula
Worked example
AED 20,000 total, 8 years, 10 OT hours a month: at 60% basic gratuity = AED 78,000, at 40% = AED 52,000. Annual value of the higher basic ≈ AED 10,500.
Frequently asked questions
Is there a legal minimum basic salary percentage?
No federal rule, but MOHRE expects a realistic split and some free zones and banks require basic of at least 50–60% for visas or loans.
Does a higher basic cost me anything?
For expats, no — there is no income tax or pension deduction. For UAE nationals, GPSSA contributions (5% employee) are on basic plus allowances, so the split matters less.
What should I negotiate?
Ask for basic to be 60%+ of total, or for gratuity to be calculated on total salary in the contract — permitted because the law sets only a minimum.