Is gratuity calculated on basic or total salary?

Updated: 24 October 2026

Why it matters so much

Gulf salaries are often split into a basic salary plus allowances, and the basic can be well under the total. Take a package of 15,000 QAR a month with a basic of 9,000 QAR, after five years in Qatar:

Using the wrong figure overstates the gratuity by 21,000 QAR. That is the most common mistake people make when they estimate it themselves.

Qatar: basic salary

Article 54 of Labour Law No. 14 of 2004 sets gratuity as a number of weeks of basic wage, based on the basic salary on the date your service ends. If your contract does not split the salary into basic and allowances, the full salary is generally treated as basic.

UAE: basic salary

Article 51 of Federal Decree-Law No. 33 of 2021 bases gratuity on the last basic salary. Housing, transport, phone and other allowances are excluded, and so are bonuses and overtime.

Saudi Arabia: actual wage

The Saudi Labour Law uses the actual wage: basic pay plus fixed allowances and benefits such as housing. If housing is provided in kind rather than paid, it is valued at up to two months' basic wage a year unless your contract sets a higher value. Commissions and similar variable pay can be left out if you and your employer agreed to that.

Summary

Tips

• Your contract and payslip show the basic figure. Use that, not the total you receive.
• The last basic salary is used for all your years, so a recent raise or promotion increases the whole gratuity.
• If your employer's figure differs from the calculator, ask which salary and how many days they used.