Final Settlement Calculator UAE 2025 - Full & Final Settlement Calculation
UAE Final Settlement Calculator - Free Tool
Employee Information
Additional Payments & Deductions
What is Final Settlement in UAE?
Final settlement in UAE, also known as full and final settlement, is the complete calculation and payment of all dues owed to an employee upon termination of their employment, whether through resignation, dismissal, or contract completion. This comprehensive settlement process ensures that employees receive all their entitled benefits and that any outstanding obligations to the employer are properly deducted.
According to Article 51 of Federal Decree-Law No. 33 of 2021, employers in Dubai and across all Emirates must complete the final settlement calculation and pay all dues within 14 days from the employee's last working day. This mandatory timeline protects employee rights and ensures timely closure of the employment relationship as per UAE labour law final settlement calculation requirements monitored by MOHRE.
Components of Final Settlement UAE
The UAE final settlement calculation comprises multiple components, both payments to be made to the employee and deductions that may be applied. Understanding each component is essential for accurate full and final settlement calculation in UAE.
Payment Components (Money Owed to Employee)
1. Outstanding Salary
Full PaymentAny unpaid salary for days or months worked up to the last working day. This includes the final month's salary calculated pro-rata if the employee doesn't work the complete month.
2. End of Service Benefits (EOSB/Gratuity)
21-30 Days per YearMandatory gratuity payment based on years of service. Employees receive 21 days of basic salary per year for the first 5 years, then 30 days per year thereafter, capped at 24 months' salary maximum.
3. Leave Encashment
Unused Leave DaysPayment for all accumulated unused annual leave days. Calculated based on basic salary only, this compensates employees for vacation days they accrued but didn't take during their employment.
4. Notice Period Pay
1-3 Months SalaryIf the employer terminates employment without serving the contractual notice period, they must pay salary in lieu of notice. Standard notice periods are 30 days (less than 5 years service) or 90 days (more than 5 years service).
5. Pending Bonuses & Incentives
Contractual EntitlementsAny unpaid performance bonuses, commissions, or incentives that were earned but not yet paid according to the employment contract or company policy.
6. Reimbursements
Approved ExpensesOutstanding reimbursements for business expenses, travel costs, or other work-related expenditures that were approved but not yet reimbursed to the employee.
7. Repatriation Ticket (If Applicable)
Exit TravelFor expatriate employees, employers may be required to provide an economy class air ticket to the employee's home country or equivalent cash value as per employment contract terms.
Deduction Components (Money Owed by Employee)
1. Company Loans & Salary Advances
Outstanding BalanceAny unpaid loans taken from the company or salary advances that weren't repaid during employment can be deducted from the final settlement amount in UAE.
2. Notice Period Shortfall
Unserved NoticeIf the employee resigns without serving the full notice period required in their contract, the employer may deduct the equivalent salary for the unserved notice days from the settlement.
3. Damages & Losses
Property DamageDocumented damages to company property, equipment, or financial losses directly caused by the employee's negligence or misconduct can be deducted if properly proven.
4. Accommodation Recovery
Housing CostsIf the employer provided accommodation and the employee didn't vacate by the required date, proportional accommodation costs may be deducted for the extended period.
5. Training Costs
Contractual ObligationsIf the employment contract includes a training bond or scholarship repayment clause and the employee leaves before the specified period, training costs may be recovered as agreed.
Final Settlement Calculation Formulas UAE
Understanding the mathematical formulas for each component of the settlement amount calculator in UAE helps both employers and employees verify calculations and ensure accuracy according to UAE labour settlement calculation standards.
Formula 1: Outstanding Salary Calculation
For Complete Months:
\[ \text{Outstanding Salary} = \text{Total Monthly Salary} \times \text{Number of Unpaid Months} \]
For Partial Month (Pro-rata):
\[ \text{Daily Salary} = \frac{\text{Total Monthly Salary}}{30} \]
\[ \text{Partial Month Salary} = \text{Daily Salary} \times \text{Number of Days Worked} \]
Formula 2: EOSB/Gratuity Calculation
Daily Wage (Basic Salary Only):
\[ \text{Daily Wage} = \frac{\text{Monthly Basic Salary}}{30} \]
For Service ≤ 5 Years:
\[ \text{EOSB} = \left(\frac{\text{Basic Salary}}{30}\right) \times 21 \times \text{Years of Service} \]
For Service > 5 Years:
\[ \text{EOSB} = \left[\left(\frac{\text{Basic Salary}}{30}\right) \times 21 \times 5\right] + \left[\left(\frac{\text{Basic Salary}}{30}\right) \times 30 \times (\text{Years} - 5)\right] \]
Maximum Cap:
\[ \text{Maximum EOSB} = \text{Basic Salary} \times 24 \text{ months} \]
Formula 3: Leave Encashment Calculation
Leave Settlement Calculation in UAE:
\[ \text{Daily Basic Wage} = \frac{\text{Monthly Basic Salary}}{30} \]
\[ \text{Leave Encashment} = \text{Daily Basic Wage} \times \text{Unused Leave Days} \]
Note: Leave encashment is calculated on basic salary only, not total salary. Allowances are excluded from this calculation as per UAE labour law.
Formula 4: Notice Period Pay Calculation
Full Month Notice Pay:
\[ \text{Notice Pay} = \text{Total Monthly Salary} \times \text{Notice Period (in months)} \]
Partial Notice Pay:
\[ \text{Daily Salary} = \frac{\text{Total Monthly Salary}}{30} \]
\[ \text{Notice Pay} = \text{Daily Salary} \times \text{Notice Period (in days)} \]
Complete Final Settlement Formula
Total Final Settlement Calculation:
\[ \text{Total Settlement} = (\text{Outstanding Salary} + \text{EOSB} + \text{Leave Encashment} + \text{Notice Pay} + \text{Bonuses} + \text{Reimbursements}) - (\text{Loans} + \text{Damages} + \text{Other Deductions}) \]
Simplified:
\[ \text{Net Settlement} = \sum \text{All Payables} - \sum \text{All Deductibles} \]
Final Settlement Examples - Step by Step
Example 1: Employee with 3 Years Service (Basic Settlement)
Employee Details:
- Basic Salary: AED 8,000
- Total Salary: AED 12,000 (includes allowances)
- Years of Service: 3 years
- Unused Leave: 15 days
- Outstanding Salary: 0 months (fully paid)
- No loans or deductions
Calculation Steps:
1. Outstanding Salary:
\[ \text{Outstanding Salary} = 0 \text{ (employee is current on salary)} \]
2. EOSB/Gratuity (3 years, under 5 years):
\[ \text{Daily Basic Wage} = \frac{8{,}000}{30} = 266.67 \text{ AED} \]
\[ \text{EOSB} = 266.67 \times 21 \times 3 = 16{,}800 \text{ AED} \]
3. Leave Encashment (15 days):
\[ \text{Leave Pay} = 266.67 \times 15 = 4{,}000 \text{ AED} \]
4. Total Final Settlement:
\[ \text{Total} = 0 + 16{,}800 + 4{,}000 = 20{,}800 \text{ AED} \]
Result: The employee receives a total final settlement of AED 20,800.
Example 2: Employee with 7 Years Service (Complex Settlement)
Employee Details:
- Basic Salary: AED 10,000
- Total Salary: AED 15,500
- Years of Service: 7 years
- Unused Leave: 22 days
- Outstanding Salary: 0.5 months
- Notice Period: 1 month (not served)
- Pending Bonus: AED 5,000
- Company Loan: AED 3,000
Calculation Steps:
1. Outstanding Salary (0.5 months):
\[ \text{Outstanding} = 15{,}500 \times 0.5 = 7{,}750 \text{ AED} \]
2. EOSB/Gratuity (7 years):
\[ \text{Daily Basic Wage} = \frac{10{,}000}{30} = 333.33 \text{ AED} \]
\[ \text{First 5 years} = 333.33 \times 21 \times 5 = 35{,}000 \text{ AED} \]
\[ \text{Remaining 2 years} = 333.33 \times 30 \times 2 = 20{,}000 \text{ AED} \]
\[ \text{Total EOSB} = 35{,}000 + 20{,}000 = 55{,}000 \text{ AED} \]
3. Leave Encashment (22 days):
\[ \text{Leave Pay} = 333.33 \times 22 = 7{,}333 \text{ AED} \]
4. Notice Period Pay (1 month employer termination):
\[ \text{Notice Pay} = 15{,}500 \times 1 = 15{,}500 \text{ AED} \]
5. Pending Bonus:
\[ \text{Bonus} = 5{,}000 \text{ AED} \]
6. Company Loan (Deduction):
\[ \text{Loan Deduction} = -3{,}000 \text{ AED} \]
7. Total Final Settlement:
\[ \text{Total Payables} = 7{,}750 + 55{,}000 + 7{,}333 + 15{,}500 + 5{,}000 = 90{,}583 \text{ AED} \]
\[ \text{Total Deductions} = 3{,}000 \text{ AED} \]
\[ \text{Net Settlement} = 90{,}583 - 3{,}000 = 87{,}583 \text{ AED} \]
Result: The employee receives a net final settlement of AED 87,583 after deducting the outstanding loan.
Example 3: Employee Resignation with Deductions
Employee Details:
- Basic Salary: AED 6,000
- Total Salary: AED 9,000
- Years of Service: 2 years
- Unused Leave: 10 days
- Outstanding Salary: 0 months
- Notice Period: 1 month (not served by employee)
- Company Loan: AED 4,500
Calculation Steps:
1. Outstanding Salary:
\[ \text{Outstanding} = 0 \text{ AED} \]
2. EOSB/Gratuity (2 years):
\[ \text{Daily Basic Wage} = \frac{6{,}000}{30} = 200 \text{ AED} \]
\[ \text{EOSB} = 200 \times 21 \times 2 = 8{,}400 \text{ AED} \]
3. Leave Encashment (10 days):
\[ \text{Leave Pay} = 200 \times 10 = 2{,}000 \text{ AED} \]
4. Notice Period Deduction (employee didn't serve):
\[ \text{Notice Deduction} = -9{,}000 \text{ AED} \]
5. Company Loan (Deduction):
\[ \text{Loan Deduction} = -4{,}500 \text{ AED} \]
6. Total Final Settlement:
\[ \text{Total Payables} = 0 + 8{,}400 + 2{,}000 = 10{,}400 \text{ AED} \]
\[ \text{Total Deductions} = 9{,}000 + 4{,}500 = 13{,}500 \text{ AED} \]
\[ \text{Net Settlement} = 10{,}400 - 13{,}500 = -3{,}100 \text{ AED} \]
Result: In this case, the deductions exceed the payables. The employee would owe AED 3,100 to the employer, which must be settled before final clearance.
UAE Labour Law Final Settlement Timeline
Timing is crucial in the final settlement process. UAE labour law establishes specific timelines that employers must follow to ensure compliance and protect employee rights.
14-Day Payment Requirement: According to Article 51 of Federal Decree-Law No. 33 of 2021, employers must pay all final settlement dues within 14 calendar days from the employee's last working day or contract end date, whichever is applicable.
| Settlement Component | Payment Timeline | Legal Requirement |
|---|---|---|
| Outstanding Salary | Within 14 days | Mandatory - Federal Decree-Law No. 33 |
| End of Service Benefits (EOSB) | Within 14 days | Mandatory - Cannot be delayed |
| Leave Encashment | Within 14 days | Mandatory - All unused leave |
| Notice Period Pay | Within 14 days | If applicable based on termination type |
| Bonuses & Incentives | Within 14 days | As per contract terms |
| Final Settlement Statement | At time of payment | Detailed breakdown required |
Consequences of Delayed Payment
Penalties for Late Payment: Employers who fail to pay final settlement within the 14-day deadline may face significant penalties including MOHRE fines, legal action, and potential suspension of their ability to hire new employees until the dues are settled.
- MOHRE Complaints: Employees can file complaints with the Ministry of Human Resources and Emiratisation (MOHRE) if final settlement is delayed beyond the legal 14-day period.
- Labour Court Action: Delayed payments can lead to labour court cases where employers may be ordered to pay the settlement amount plus interest and legal costs.
- WPS Penalties: Failure to process final payments through the Wage Protection System can result in administrative penalties and restrictions on the company's operations.
- Visa Cancellation Delays: Without completing the final settlement, employers cannot cancel the employee's visa, potentially leading to ongoing visa sponsorship obligations.
- Reputation Impact: Companies known for delaying final settlements may face difficulties in recruitment and damage to their employer brand reputation.
Leave Settlement Calculation in UAE - Detailed Guide
Leave encashment is a critical component of the UAE employee final settlement calculation. Understanding how unused leave is calculated ensures employees receive their full entitlements as per MOHRE guidelines.
Annual Leave Entitlement in UAE
- Standard Annual Leave: Employees who complete one year of service are entitled to 30 calendar days of paid annual leave per year.
- Pro-rata Leave: Employees with 6-12 months of service receive 2 calendar days of leave per month worked (pro-rated).
- Less than 6 Months: Employees with less than 6 months of service are not entitled to annual leave but must be compensated for any accrued leave upon termination.
- Leave Accumulation: With employer approval, unused leave can be carried forward to the next year, but employers cannot delay leave for more than 2 consecutive years.
Leave Encashment Calculation Rules
Important Rule: Leave encashment at termination is calculated based on basic salary ONLY, excluding all allowances (housing, transportation, etc.).
Standard Leave Encashment Formula:
\[ \text{Leave Encashment} = \left(\frac{\text{Monthly Basic Salary}}{30}\right) \times \text{Unused Leave Days} \]
Example Calculation:
- Basic Salary: AED 7,000
- Unused Leave: 25 days
- Daily Wage: 7,000 ÷ 30 = AED 233.33
- Leave Encashment: 233.33 × 25 = AED 5,833
Note: When employees take annual leave during their employment (not at termination), they receive their full salary including allowances. However, leave encashment upon termination is calculated on basic salary only as per Article 29 of UAE Labour Law.
Common Mistakes in Final Settlement Calculation UAE
Many employers and HR departments make errors when calculating final settlements in Dubai and across the UAE. Avoiding these common mistakes ensures accurate UAE labour settlement calculation and compliance with MOHRE requirements.
Mistake 1: Using Gross Salary for All Calculations
| Settlement Component | Calculation Base | Common Error |
|---|---|---|
| EOSB/Gratuity | Basic Salary ONLY | Using gross salary (wrong) |
| Leave Encashment | Basic Salary ONLY | Including allowances (wrong) |
| Outstanding Salary | Total/Gross Salary | Using gross is correct |
| Notice Period Pay | Total/Gross Salary | Using gross is correct |
Mistake 2: Incorrect EOSB Calculation for Multi-Year Service
Wrong: Applying 21 days per year for all years of service
Correct: 21 days/year for first 5 years, then 30 days/year for years beyond 5
Example: 8 years service = (21 × 5) + (30 × 3) days, NOT (21 × 8) days
Mistake 3: Not Deducting Unpaid Leave from Service Period
When calculating EOSB, any periods of unpaid leave must be deducted from the total service period. Failure to account for unpaid leave results in overpayment of gratuity.
Mistake 4: Missing the 14-Day Payment Deadline
Many employers delay final settlement due to administrative processes, visa cancellation procedures, or documentation requirements. However, UAE law is clear that all payments must be completed within 14 days regardless of these other processes.
Mistake 5: Improper Deduction Authorization
Employers cannot arbitrarily deduct amounts from final settlement. All deductions must be legally justified (loans documented in contracts, proven damages, etc.) or court-ordered. Unauthorized deductions can lead to labour disputes and MOHRE penalties.
Dubai Settlement Calculator vs. Other Emirates
While this guide focuses on the complete UAE final settlement calculation, it's important to note that the same Federal Decree-Law No. 33 of 2021 applies uniformly across all Emirates including Dubai, Abu Dhabi, Sharjah, Ajman, Fujairah, Ras Al Khaimah, and Umm Al Quwain.
Uniform Application: The Dubai settlement calculator uses the exact same formulas and rules as any UAE settlement calculator. Federal labour law applies equally across all Emirates for mainland companies.
Free Zone Exceptions
Some UAE free zones have their own employment regulations that may differ from mainland UAE labour law:
- DIFC (Dubai International Financial Centre): Has its own employment law with different EOSB calculation methods including the DEWS (DIFC Employee Workplace Savings) scheme.
- ADGM (Abu Dhabi Global Market): Operates under its own employment framework with distinct end-of-service benefit structures.
- JAFZA (Jebel Ali Free Zone): Follows specific regulations for final settlement that may vary from mainland UAE calculations.
- Other Free Zones: Each free zone may have specific regulations, so employees should verify their settlement calculation with their specific free zone authority.
Note: If you work in a free zone, confirm your settlement calculation with your free zone's employment regulations or HR department as the formulas may differ from this standard UAE labour law calculation.
How to Verify Your Final Settlement Calculation
Employees should proactively verify their final settlement amount to ensure all components are calculated correctly as per UAE law. Follow these steps for verification:
- Request Detailed Breakdown: Ask your employer for a complete itemized breakdown showing each component of the settlement separately (EOSB, leave encashment, outstanding salary, etc.).
- Verify Service Period: Confirm your exact start date and end date. Calculate total years of service including any fractional years (e.g., 3 years and 7 months = 3.58 years).
- Check Basic Salary Amount: Ensure the basic salary used for EOSB and leave calculations matches your employment contract. This should be the last drawn basic salary.
- Count Unused Leave Days: Review your leave records to confirm the number of unused leave days. This should include any carried-forward leave from previous years.
- Verify Deductions: Ensure all deductions are legitimate and properly documented. Request supporting documents for any loans, advances, or damages claimed.
- Use Settlement Calculator: Input your details into our UAE final settlement calculator above to get an independent calculation for comparison.
- Review Contract Terms: Check your employment contract for any additional benefits, bonuses, or special settlement terms that should be included.
- Calculate Independently: Use the formulas provided in this guide to manually calculate each component and compare with the employer's figures.
Frequently Asked Questions - Final Settlement UAE
Why Use RevisionTown's UAE Final Settlement Calculator?
Our comprehensive final settlement calculator UAE provides accurate, instant calculations covering all settlement components based on the latest MOHRE regulations and Federal Decree-Law No. 33 of 2021. Whether you're an employee verifying your settlement or an employer managing HR processes in Dubai or any Emirates, this calculator offers several advantages:
- Complete Settlement Coverage: Unlike basic EOSB calculators, our tool calculates ALL components including gratuity, leave encashment, outstanding salary, notice period pay, bonuses, and deductions for a truly comprehensive settlement amount.
- 100% Compliant: All calculations follow official MOHRE UAE labour law final settlement calculation formulas and regulations, ensuring legal compliance for employers and accurate entitlements for employees.
- Separate Calculations: Correctly applies basic salary for EOSB and leave calculations, and gross salary for other components, avoiding the common mistake of using the wrong salary base.
- Instant Detailed Breakdown: Get immediate results with step-by-step breakdowns showing exactly how each settlement component is calculated, making verification transparent and easy.
- Deduction Handling: Include loans, notice period shortfalls, and other deductions to calculate your true net settlement amount, not just gross payments.
- Free to Use: Our UAE employee final settlement calculation tool is completely free with no registration, subscriptions, or hidden charges required.
- Mobile Accessible: Access the settlement calculator from any device for convenient calculation on the go, whether you're in Dubai, Abu Dhabi, or anywhere in the UAE.
- Educational Resource: Beyond calculations, this comprehensive guide educates both employers and employees about their rights, obligations, and proper settlement procedures.
- Regularly Updated: We continuously update the calculator and content to reflect any changes in UAE labour settlement calculation rules and MOHRE guidelines.
Understanding your full and final settlement calculation UAE entitlements is essential for financial planning, career transitions, and ensuring fair treatment. Use our end of settlement calculator UAE tool to accurately determine all components of your settlement and make informed decisions about your employment with confidence.