The short answer
| Country | Salary used for end-of-service |
|---|---|
| UAE | Last basic salary only |
| Qatar | Last basic salary |
| Oman | Last basic wage |
| Saudi Arabia | Last actual wage – basic plus regular allowances |
| Kuwait | Last remuneration actually received |
| Bahrain | Last basic wage plus social allowance |
In all six countries, the employment contract can be more generous than the law, but it cannot reduce the statutory minimum.
What “basic salary” means
The basic salary is the fixed amount stated as “basic” in your employment contract, before any allowances. Housing, transport, telephone, education and other allowances, as well as overtime, commissions and bonuses, are not part of it.
In the UAE, Qatar and Oman, end-of-service is calculated on this basic figure only. That is why many employers in these countries set the basic salary at around half of the total package – and why it pays to check the split before you sign an offer.
What “actual wage” means in Saudi Arabia
Saudi law defines the wage used for the end-of-service award as the basic wage plus all regular increases, such as housing and transport allowances and amounts fixed by the contract or work rules. Commissions and similar variable pay may be excluded if the parties agree.
Kuwait and Bahrain
Kuwait’s Article 51 refers to remuneration – in practice the salary you were actually receiving at the end of your service, which in most contracts includes regular fixed allowances.
Bahrain is more specific: Article 47 of the Labour Law says the indemnity is calculated on the last basic wage plus the social allowance, if any. Housing, transport and other allowances are not included.
How much difference does it make?
Take a package of 10,000 a month, of which 6,000 is basic salary, and seven years of service ending with termination by the employer:
Daily wage: AED 200.00 (monthly ÷ 30)
- 5 yrs × 21 days/yrAED 21,000.00
- 2 yrs × 30 days/yrAED 12,000.00
- Estimated entitlementAED 33,000.00
Daily wage: SAR 333.33 (monthly ÷ 30)
- 5 yrs × 15 days/yrSAR 25,000.00
- 2 yrs × 30 days/yrSAR 20,000.00
- Estimated entitlementSAR 45,000.00
The formulas differ too, but the salary base alone explains a large part of the gap. On the same formula, using 6,000 instead of 10,000 cuts the result by 40%.
Tips before you sign a job offer
- Ask for the basic salary and each allowance to be listed separately.
- In the UAE, Qatar and Oman, compare offers on the basic salary as well as the total package.
- Check whether a future pay rise increases the basic salary or only an allowance.
- Keep your latest contract and payslips; the last salary is what counts.
Each of our calculators labels the salary field according to that country’s rule, so you always know which figure to enter.
Questions
Is gratuity calculated on gross salary in the UAE?
No. UAE gratuity uses the basic salary in the contract only.
Are allowances included in Saudi end of service?
Yes. Regular allowances such as housing and transport are part of the wage used.