Compare statutory gratuity against a funded savings scheme.
Better option
—
Statutory gratuity
—
Savings scheme balance
—
Two ways your end-of-service pot can be built
End-of-service benefit is a real part of compensation in the UAE, and there are now two structures for it. The traditional route is statutory gratuity: a fixed formula on your final basic salary, paid as a lump sum when you leave, that earns no investment return along the way. The newer route is a funded workplace savings scheme, such as the DEWS scheme used in the DIFC or a MOHRE-approved alternative, where the employer pays a monthly contribution into an investment fund that compounds. This calculator projects both and tells you which ends larger. It is built for employees deciding whether to opt into a savings scheme, and for HR teams explaining the trade-off.
The difference is mechanical. Gratuity is a one-time calculation on your basic salary at exit. A funded scheme is a stream of monthly contributions invested at a return, so it behaves like any other compounding pot. That single distinction, lump-sum formula versus invested stream, is why the answer depends so heavily on time and markets.
Why time and return decide the winner
Statutory gratuity accrues at a set rate per year of service. As the calculator models it, the formula gives 21 days of basic wage for each of the first five years and 30 days a year thereafter, with the daily wage taken as the monthly basic divided by 30, and the total capped at two years of wages. A funded scheme instead invests a monthly employer contribution, modelled here at about 8.33 percent of basic for employees with five or more years of service and about 5.83 percent below five years. These accrual days, the day-count convention, the two-year cap, and the contribution percentages are the figures the calculator applies and should be confirmed against the latest MOHRE rules and your scheme documents. Over short periods the two land close. Over longer periods, and at a healthy return, compounding lets the funded scheme pull ahead.
Six years at AED 12,000 basic, compared
Take the defaults: a monthly basic of AED 12,000, six years of service, and a 6 percent expected return. The statutory gratuity is the daily wage of AED 400 (12,000 divided by 30) times 21 days for five years plus 30 days for the sixth, which is 135 days, giving AED 54,000. The funded scheme invests the monthly contribution, 8.33 percent of AED 12,000, which the tool computes precisely as about AED 1,000 a month, compounded monthly at 6 percent over six years. That projects to about AED 86,374. The calculator carries the exact unrounded contribution, so recomputing from a round AED 1,000 will be a few dirhams off.
| Step | Figure |
|---|
The crossover point most people misjudge
The instinct is to assume a funded scheme always wins, but it does not. At very short tenures, or if the fund returns little, gratuity can match or beat it, because gratuity is guaranteed and the scheme is not. The crossover also moves with the contribution tier: below five years the modelled contribution is lower at about 5.83 percent, which slows the scheme’s early lead. A practical tip: a funded scheme also carries investment risk, so the AED 86,374 above is a projection, not a promise, while the AED 54,000 gratuity is a formula outcome. If you cannot stomach a down year near your planned exit, weight that uncertainty into the decision rather than chasing the higher projected number.
Can my employer move me to a savings scheme without my agreement?
Approved schemes such as DEWS replace the statutory gratuity accrual going forward once you are enrolled, but the framework and any opt-in mechanics are set by the relevant authority and your employer’s policy. Past gratuity entitlement up to the switch date is generally protected. Check your contract and the scheme’s joining terms so you know exactly what is being replaced and from when.
Is the savings-scheme balance taxed when I withdraw it?
The UAE has no personal income tax, so a withdrawal of your end-of-service balance is not taxed as personal income here. The investment growth inside the fund is also not subject to a personal capital gains tax under current rules. If you are also tax-resident elsewhere, that other country may treat the payout differently, so confirm your position before assuming the full balance is yours net.