Gratuity is a key benefit for employees in the UAE. It’s a payment from your employer when your job ends, rewarding your service. But sometimes, employers deny gratuity payments. Knowing the valid reasons for such refusals can help you understand your rights. This guide lists the top 9 reasons your employer might legally deny gratuity in the UAE, updated for 2025. We’ll use simple language and provide actionable advice to avoid disputes.

What is Gratuity in the UAE?
Gratuity, or end-of-service benefits, is a mandatory payment under UAE labor law. It’s given to employees who complete at least one year of service. The amount depends on your basic salary and years worked. However, certain conditions allow employers to withhold this payment legally.
Key Points:
- Eligibility: You need at least one year of continuous service.
- Calculation: Based on basic salary, excluding bonuses or allowances.
- Contract Types: Rules vary for limited (fixed-term) and unlimited (open-ended) contracts.
Top 9 Valid Reasons for Gratuity Denial
Here are the nine most common legal reasons your employer may deny gratuity in the UAE, based on UAE Labor Law (Federal Decree-Law No. 33 of 2021) and insights from top-ranking sources.
1. Less Than One Year of Service
You must work for at least one year to qualify for gratuity. If you leave before completing 12 months, your employer can legally deny payment. This rule applies to both limited and unlimited contracts.
Example: If you resign after 10 months, you get no gratuity.
2. Resignation Without Notice (Unlimited Contract)
For unlimited contracts, you must serve the notice period (30–90 days, as per your contract). Resigning without notice or without valid reasons (e.g., employer breach or assault) allows your employer to withhold gratuity.
Tip: Always provide written notice to avoid this issue.
3. Early Termination of Limited Contract
If you’re on a limited contract and resign before its term ends, you may lose your gratuity. You must complete the full contract term unless you have five or more years of service.
Example: Leaving a two-year contract after one year typically forfeits gratuity.
4. Termination for Misconduct (Article 120)
Employers can deny gratuity under Article 120 of UAE Labour Law if they fire you for serious misconduct. These include:
- Using a false identity or forged documents is considered serious misconduct.
- Causing significant financial loss to the employer.
- Violating workplace safety rules.
- Disobeying instructions after warnings.
- Committing acts of moral turpitude (e.g., theft, fraud).
- Being intoxicated or absent without valid reason.
5. Working for Another Employer During Leave
Article 88 of UAE Labour Law prohibits working for another employer during annual or sick leave. If caught, your employer can terminate your contract and deny gratuity.
Tip: Avoid side jobs during leave to protect your benefits.
6. Reduced Gratuity for Short Service (Unlimited Contract)
If you resign from an unlimited contract with 1–5 years of service, your gratuity may be reduced:
- 1–3 years: 1/3 of the full amount.
- 3–5 years: 2/3 of the full amount.
- 5+ years: Full gratuity.
Example: With 2 years of service, you get only one-third of the calculated gratuity.
7. Failure to Meet Contract Obligations
If you violate contract terms, such as not performing basic duties despite warnings, your employer may terminate you and withhold gratuity. This falls under Article 120.
Tip: Review your contract to understand your obligations.
8. Damage to Employer Property
Causing deliberate or negligent damage to company property can lead to gratuity forfeiture. The deduction is proportional to the damage caused, as per UAE Labour Law.
Example: Breaking equipment due to negligence may reduce your gratuity.
9. Termination During Probation
If you’re terminated during your probation period (typically 6 months), you’re not entitled to gratuity, even if you’ve worked for part of a year.
Note: Probation rules are strict, so clarify terms when joining a company.
Table: Summary of Gratuity Denial Reasons
Reason | Contract Type | Legal Basis | Action to Avoid |
---|---|---|---|
Less than 1 year | Both | Article 51 | Complete 1 year |
No notice (unlimited) | Unlimited | Article 117 | Serve notice period |
Early exit (limited) | Limited | Article 116 | Complete contract term |
Misconduct | Both | Article 120 | Follow workplace rules |
Work during leave | Both | Article 88 | Avoid side jobs |
Short service | Unlimited | Article 132 | Work 5+ years |
Contract violation | Both | Article 120 | Meet contract terms |
Property damage | Both | Labour Law | Handle equipment carefully |
Probation termination | Both | Labour Law | Clarify probation terms |
What to Do If Your Gratuity Is Denied
If your employer denies gratuity, follow these steps to resolve the issue:
- Check Your Eligibility: Please ensure that you have fulfilled the one-year service requirement and adhered to all contract terms.
- Talk to HR: Request a written explanation for the denial.
- Gather Documents: Please gather your contract, salary slips, and termination letter.
- Contact MOHRE: File a complaint via the MOHRE website or call 800-84. They can mediate disputes.
- Seek Legal Advice: If unresolved, consult a UAE labor lawyer or file a case in the Labour Court.
Common Misconceptions About Gratuity Denial
- Myth: Employers can deny gratuity for any reason.
Fact: Denials must align with UAE labor law, such as Article 120 violations. - Myth: You lose gratuity if the company goes bankrupt.
Fact: Gratuity is a legal obligation, even in bankruptcy. - Myth: Domestic workers don’t get gratuity.
Fact: After one year of service, they receive one month’s salary annually.
2025 UAE Labour Law Updates
As of 2025, the UAE Labor Law (Federal Decree-Law No. 33 of 2021) remains the framework for gratuity. Key points:
- All contracts are now limited (up to 5 years), but gratuity rules are unchanged.
- Gratuity is calculated as 21 days’ pay per year for the first 5 years and 30 days’ pay per year thereafter.
- New end-of-service schemes for UAE citizens may not affect expatriates.
Frequently Asked Questions (FAQs)
Conclusion
Understanding why your employer might deny gratuity in the UAE helps you protect your rights. The top 9 reasons include short service periods, misconduct, or contract violations. Always review your contract and follow UAE Labour Law rules to avoid issues. If your gratuity is denied, contact MOHRE or seek legal advice. Use tools like the UAE Gratuity Calculator to estimate your entitlement and plan your finances.