ADGM kept the gratuity — and since April 2025 it is paid on every exit

Which law you are under

ADGM is a financial free zone with its own civil and commercial law, and employment inside it is governed by ADGM regulations rather than Federal Decree-Law 33 of 2021. The current text is the Employment Regulations 2024, enacted by the ADGM Board on 3 January 2025 and in force from 1 April 2025 (section 75(4)), consolidated in September 2025 after Amendment No. 1 of 2025. They replaced the Employment Regulations 2019.

Two groups inside the zone are carved out by section 75(3): employers holding a dual licence from the Abu Dhabi Department of Economic Development whose staff are governed by the federal Labour Law, and employers the Board has designated as exempt under the Commercial Licensing Regulations (Exemptions Order) 2025. If your employer is a dual-licence entity, the federal formula applies to you, not this page.

Section 61, line by line

"Basic Wage" is defined as the employee's wage "excluding allowances or Variable Pay", and "Wages" as all payments for work under the contract excluding variable pay — so bonuses and commission are outside both the base and the 50% test.

The 365-day divisor: why ADGM pays slightly less than the federal formula on the same salary

The federal regime works in months: one day of basic wage is monthly basic ÷ 30. ADGM works in years: annual basic ÷ 365. On the same monthly basic, 12 ÷ 365 is a smaller daily figure than 1 ÷ 30 — by about 1.4%. Take a basic wage of AED 20,000 a month (AED 240,000 a year):

The gap is small and it is written into the regulation, not an error by payroll. Our gratuity calculator uses the federal ÷30 convention, so for an ADGM exit take its figure and multiply by 360 ÷ 365 (0.9863) — or run the arithmetic above directly.

One divisor for gratuity, another for penalties. The same regulations define "Daily Wage" — used for the late-payment penalty below, sick pay and holidays — as the annual wage divided by 260 for a five-day week. Gratuity alone uses basic wage ÷ 365. Two different day-rates coexist in one document; do not carry one into the other.

What changed from the 2019 regulations

We read section 59 of the 2019 text alongside section 61 of the 2024 text. Three substantive changes:

• Termination for cause no longer forfeits it. Section 59(4) of the 2019 regulations denied any gratuity where the employer terminated for cause under section 56(1). Section 61(1) now says "regardless of the reason for termination". This is the change that bites in practice: a summary dismissal after six years of service was previously a loss of roughly 150 days of basic wage; it no longer is.
• The two-year cap is gone. The 2019 text limited the total to "the Wages of 2 years of service". Because that cap was measured in total wages, not basic, it rarely bound: with an all-basic package it only applied beyond about 26 years' service, and with basic at 50% of wages beyond about 50. Its removal matters for very long tenures and for anyone whose accrued gratuity was being quoted "subject to the cap".
• The daily rate is fixed at ÷365. The 2019 wording was "based on the number of days in the year", which left room for 360-day conventions. The 2024 text names the number.

Smaller shifts: the savings-scheme alternative is no longer tied to the employer having "established a pension scheme" — any pension or savings scheme offered in writing qualifies; successive fixed-term contracts are expressly aggregated; and the 50% basic-wage floor is written into the gratuity section itself.

Who is outside section 61

• UAE and GCC nationals (s. 60). The employer must enrol them in the federal pension scheme within 30 days of starting, and they are not eligible for gratuity under section 61 — unless they hold the pension authority's written approval not to participate and gave the employer a copy before, or within 30 calendar days of, starting work. The 2019 text allowed that approval any time before termination; the 2024 text moved the deadline to the start of employment.
• Employees still on probation (s. 8(2)(d)). Probation may run up to six months (or half the contract term if shorter), and section 61 does not apply during it. Service under one year does not qualify in any case.
• Employees who chose a scheme under s. 61(5)–(6) — in writing, with their own written confirmation. An oral arrangement, or a scheme the employee never opted into, does not displace the gratuity.
• Dual-licence and exempted employers (s. 75(3)), as above.

When it must be paid, and what late costs

Section 14 sets the clock. All wages "and any other amounts owing", excluding variable payments, are due within 21 calendar days of the Termination Date. Gratuity is such an amount. Miss the deadline and the employer "shall pay a penalty to the Employee equal to the Employee's Daily Wage for each calendar day" in arrears, with four qualifications written into the section:

• the unpaid sum must exceed one week's wage before any penalty runs (s. 14(5));
• the penalty is capped at six months' Daily Wage (s. 14(6));
• the Court may waive or reduce it "where it considers it just and equitable", having regard to both parties' conduct (s. 14(4));
• it applies only where the Termination Date falls after the regulations came into force, i.e. on or after 1 April 2025 (s. 14(7)).

Compare the onshore rule: Article 53 of the federal law gives the employer 14 days and attaches no automatic daily penalty — the remedy is a MOHRE complaint. ADGM's deadline is a week longer, but the penalty is self-executing and runs at the full daily wage, not basic.

Two neighbouring obligations run on the same exit: a one-way repatriation flight within 30 days of termination (s. 62, unless the employee finds new UAE employment or sponsorship within 30 days, is a remote employee outside the UAE, or was terminated for cause), and an employer record of "the amount of any end of service gratuity paid" (s. 9(1)(j)) — which is also the document to ask for if the figure is disputed.

ADGM, DIFC and onshore side by side

For the DIFC column see DIFC gratuity and DEWS; for the onshore voluntary scheme see the savings scheme.

Checking your own number

1. Confirm the regime. ADGM-licensed employer, not dual-licensed → ER 2024. Check the licence on the ADGM public register if unsure.
2. Take basic wage at the Termination Date and test it against 50% of wages. If basic is below half, the base is wrong before any multiplication starts.
3. Divide annual basic by 365, multiply by 21 for each of the first five years and 30 for each year after, pro rata for the part year.
4. Ignore the reason for leaving and any "cap" language carried over from an old contract template — neither survives in the 2024 text.
5. Check deductions against s. 61(4): amounts you actually owe the employer, not general "costs".
6. Diarise day 21. If the full-and-final is still unpaid and exceeds a week's wage, the daily penalty is accruing from day 22.
7. If you opted into a scheme, find the two documents: the employer's written offer and your written confirmation. Without both, section 61(2) still applies.