It depends on the country. In the UAE, Article 51 of the 2021 labour law uses the last basic wage, which by definition leaves out allowances and benefits in kind. In Saudi Arabia, Article 84 of the Labor Law uses the last wage, and the law defines wage as the actual wage: the basic wage plus the other increases due, such as commission and contractual allowances.
What counts as the basic wage in the UAE?
Article 1 of Federal Decree Law No. 33 of 2021 defines the basic wage as the wage in the contract, paid monthly, weekly, daily, hourly or by the piece, "which does not include any other allowances or benefits in kind". Article 51 calculates gratuity on the last basic wage. So a contract that pays AED 6,000 basic plus AED 3,000 for housing and AED 1,000 for transport earns gratuity on AED 6,000.
For five years that is 105 days at AED 200 a day, AED 21,000, or about PKR 1,581,521 at the mid market rate on 8 November 2026. On the full AED 10,000 it would have been AED 35,000. The split between basic wage and allowances in the contract decides the gratuity.
Does any part of the UAE rule use the full wage?
The limit. Article 51(6) caps the gratuity at "two years' wage", and the Decree Law defines wage as the basic wage plus the cash allowances and benefits in kind in the contract. Read that way, the cap is two years of the full wage. It only matters after about twenty five years of service.
What counts in Saudi Arabia?
Article 84 of the Saudi Labor Law bases the award on the last wage, and Article 2 says that "wage" means the actual wage: the basic wage plus the other increases due to the worker under the contract or the work regulations, including commission, allowances for effort or risk, and bonuses the contract or custom provides for. The worker and employer may agree to leave commissions and similar variable pay out (Article 86).
Housing and transport allowances are not named in Article 2. Since 2025, Article 61 says the employer provides housing and transport or a cash allowance paid with the wage; whether such an allowance counts toward the award can depend on the contract, and this site does not decide it.
Why it matters: on a wage of SAR 5,000 basic plus SAR 2,000 housing and SAR 1,000 transport, five years earn SAR 20,000 if all SAR 8,000 counts and SAR 12,500 if only the basic wage does, about PKR 1,475,082 and PKR 921,926 at the mid market rate.
What about piece rate or commission pay?
In the UAE, piecework pay uses the average daily wage over the six months before the claim (Article 23). In Saudi Arabia, piece rate pay is averaged over the actual working days of the last year of service, and pay made up wholly of commission is averaged over the days actually worked (Article 96).
What should you check in your contract?
In the UAE, the basic wage figure: it is the figure gratuity is built on, and a raise paid as a new allowance does not raise it. If your employer increases your pay, ask whether the increase goes into the basic wage. After ten years, gratuity is 255 days of basic wage (105 for the first five years and 150 for the next five), so every extra AED 1,000 of monthly basic wage, AED 33.33 a day, adds AED 8,500 to it.
Also in the UAE, check the basic wage figure itself: it is often well below the total. In Saudi Arabia, which allowances the contract treats as part of the wage, and whether it excludes commission under Article 86. In both, keep your last payslips; the last wage is the one that counts.
Sources
- Federal Decree Law No. 33 of 2021 and its amendments, MOHRE English text (PDF, Internet Archive copy of 2 March 2026), checked 18 October 2026
- Saudi Labor Law, Articles 84 to 88 (HRSD consolidated English text), checked 18 October 2026
- Saudi Labor Law, Article 2 definitions (HRSD), checked 18 October 2026
- Saudi Labor Law, Article 96 (HRSD), checked 18 October 2026
- Royal Decree M/44 of 8/2/1446H amending the Labor Law, Umm Al Qura, checked 18 October 2026
Last checked 18 October 2026. Rates on this page are from 8 November 2026 and are refreshed daily. If a rule here has changed, the official source wins.